Ahead of the 2010 Budget businesses are lobbying the government to scrap the proposed National Insurance hike.

UK businesses are calling for the UK government to scrap the proposed National Insurance (NI) contribution hike – planned for April 2011 – which they say will discourage new recruitment.

The British Chambers of Commerce (BCC) is leading a coalition against the one per cent hike on employer NI Contributions which is planned to be introduced on 1 April.

The coalition includes the British Retail Consortium (BRC), Confederation of British Industry (CBI), Chartered Institute of Personnel and Development (CIPD), Forum of Private Business (FPB), Federation of Small Businesses (FSB), Institute of Directors (IOD), and the Recruitment Employment Confederation (REC).

A submission by the BRC to the Chancellor today has outlined why the coalition believes a reversal of the planned increase should go ahead. They say that the government should concentrate on public spending cuts, rather than tax increases, which could discourage companies of all sizes recruiting new staff at a critical point in the recovery of the UK’s economy.

“We urge the government to work with business groups to find alternative ways to close the UK’s budget deficit – beginning with a credible plan to reduce inefficiency in public sector spending.

“Any government has to realise that additional taxes on businesses, especially small and medium-sized companies, must be a last resort, not an easy way forward.”

Stephen Robertson, BRC Director General, said: “The size of the country’s deficit means action must be taken. To nurture our fledgling recovery, the main tool for dealing with the deficit has to be cutting non-vital public sector spending.

“Some tax rises may be inevitable, but no Government should rely on tax hikes to reduce borrowing.”

As well as calling for the one per cent NI hike to be scrapped, the coalition is also calling for this year’s National Minimum Wage increase to be no higher than one per cent so as to not overburden businesses both small and large.

A date for the 2010 budget has not yet been set, although Deloitte predicts it to be either the 17 or 24 March. Anticipation will begin to build, however, as it is the final one before the General Election, so could potentially be a final opportunity for the current government to go out with a bang.