According to the Conservatives, the proposed 1% increase in National Insurance Contributions will result in the loss of nearly 60,000 jobs from the UK economy. This figure was cited in their election manifesto, published on Tuesday.
But reports in the Financial Times this morning suggest that the actual job loss figure would be much lower, and possibly as little as half the number quoted by the Tories. The FT makes reference to a report on National Insurance published in 2007, which looked at the effect of tax rises on unemployment. Using the methodologies of the paper, the FT claims that a 1% rise in NIC would actually result in the loss of less than 30,000 jobs in the UK.
The Conservative manifesto outlined plans to raise the NIC thresholds in an attempt to smooth the effects of a rise in employee and employer contributions. It is believed that this approach would be far less damaging to the economy than Labour’s 1% increase. However, Alistair Darling has already slammed the Conservatives job loss claims and the FT quotes the Chancellor as saying that the 2007 report further undermines their figures.
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