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Jobs threatened by increase in insurance payments, say Tories

Ben Russell
Tuesday 11 June 2002 00:00 BST
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The Tories attacked the increase in national insurance contributions yesterday, claiming jobs would be threatened because it was a direct tax on small businesses.

John Bercow, shadow Chief Secretary to the Treasury, said the 1p increase for employers and workers in contributions proposed in the Budget had provoked "anguish from vulnerable small businesses".

Speaking in a debate during the report stage of the National Insurance Bill, Mr Bercow said the rise would hit self-employed business people not only by raising the cost of their employees' wages, but also by reducing their own income. He attempted to amend the Bill to stop people who are employed by their own one-person companies paying the increase twice ­ once as an employee and once as an employer.

Mr Bercow was backed by the Federation of Small Businesses, which claimed the increase would "hamper job creation and further increase burdens on business".

He said: "There are three million self-employed business people in the country whose average incomes are less than that among people who are employed. The National Insurance Bill effectively forces those businesses to pay the increase ... twice."

He said an amendment to exempt small unincorporated businesses from the increase would provide "succour" for entrepreneurs. "This will help the self-employed market traders, builders, decorators and a plethora of other people to employ more staff, to keep the staff they have got and to keep afloat despite the impositions from Government that rain down on them," he said.

Earlier, a Liberal Democrat proposal to impose national insurance contributions of 10 per cent on incomes over £100,000 to raise funding for the health service was rejected by MPs and labelled incompetent by the Government.

Dr Evan Harris, the Liberal Democrat spokesman on health, warned that plans to increase both employees' and employers' contributions by 1p would cause "significant difficulties", particularly for firms in manufacturing.

He said the Liberal Democrat proposal "would be a fair way, it would not have such a severe impact on businesses, it would be transparent and it would not be possible to avoid".

But Dawn Primarolo, the Paymaster General, said the measure would not increase investment for the NHS, telling MPs the measures represented a "stealth tax". She insisted the Government plan was "the fairest way to build on the Beveridge principle to guarantee extra resources which are necessary for the NHS".

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