Senior channel leaders have added their voices to the ongoing National Insurance (NI) debate, with many agreeing that any increases would have an adverse impact on the IT industry.
Labour’s planned one per cent NI increase on anyone earning more than £20,000 has been described as a ‘tax on jobs’ by many UK business leaders.
A growing backlash leading up to the General Election next month has seen a host of leading business figures back the Tories in calling for the scrappage of the increase, which is due to take effect in April 2011.
While not wanting to be aligned with any particular party, channel heads have also condemned the plans.
Mike Norris, chief executive of Computacenter, said: “An NI increase will take jobs away from the technology sector and make offshoring more competitive. Increasing the cost of employing people will increase the cost base of the UK and make other countries a lot more competitive. However, my comments are apolitical.”
Wayne Cockerill, chairman of VAR buying group NBG and managing director of reseller Aindale Business Management Services, said NI was one of several concerns raised by his members.
“There is a lot going on at the moment,” he said. “For example, the mandatory contributions employers are going to have to make to pensions is causing concern for a lot of our smaller members, but the rise in NI is going to add yet another cost at what is not a good time for the economy in general.
“However I am also a realist and know that the country is in a mess and we cannot get out of it freely. Businesses are a lot easier to target than individuals and I know a lot of smaller firms are holding back pay rises for staff to cover the proposed NI rise, rather than letting staff go.”
Joe Hemani, chairman of Westcoast, said: “This is a tax on jobs. It is the wrong thing to do. The country needs to raise money, but it should not be by taking it away from those that employ people. If anything the government should increase VAT on luxury items which won't affect the middle and lower earners and is more of a choice.”
Mark Hatton, managing director of Sphinx, said: “It seems to be a relentless series of tax rises, both personal and corporate, allied to red tape, which makes wealth and job creation harder. Many corporates have had to cut their cloth accordingly and it is time the government started making similar moves."
Shaune Parsons, managing director of ComputerWorld Wales, was very vocal about the NI rise.
“This is the biggest stealth tax created. Many employees do not even realise how much it costs to employ them. We have five vacancies but when we look at the cost of the NI increase we are considering making do with four vacancies.
“We are only 20-strong and it would have that effect on us – I dread to think of the cost to larger players such as Computacenter,” he said.
Paul Barlow, managing director of Servium, said: “I do not think an NI rise would be good for business. It is particularly harsh to the lower-paid employees. When NI went up in 2002 we didn't have a global recession to contend with. This would also reduce the competitiveness of the UK and is something that should at least be postponed for a couple of years.
“The government needs to start making savings in its own departments first, such as reducing the costs of agencies and quangos,” he said.
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