Eight prominent small business groups have formed a coalition in a new bid to tackle Government plans to implement a 1% increase in National Insurance Contributions (NICs).

They have argued that further rises in National Insurance will limit the availability of jobs, lead to more people claiming unemployment benefits, and generally restrict the UK’s economic recovery.

The Confederation of British Industry (CBI), the British Chambers of Commerce (BCC) and the Federation of Small Businesses (FSB) are among those that have joined the business coalition, which aims to reverse the National Insurance increases scheduled for April 2011.

The groups’ petition reads:

“Businesses across the country know that it is imperative for the Government to begin the difficult job of repairing the public finances. But this NICs increase is a 'tax on jobs' - and will discourage companies of all sizes from taking on new staff at a critical point in our economic recovery.

“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.”

Earlier this month, a survey from the BCC showed that a high proportion of small businesses feel the planned rises should be scrapped and replaced by a less damaging alternative, such as a VAT change.

The coalition’s petition can be accessed by visiting the website www.no-nics-rise.co.uk.