The Chancellor of the Exchequer, Alistair Darling, has admitted that the government’s planned rise in National lnsurance in 2011 will cost jobs. However, he told the Treasury Select Committee yesterday that the impact would be “limited” and “manageable”.

The government plans to increase NI by 1% both for employees and employers.

Earlier this week, the Conservatives said they would mitigate the effect of the rise by cutting the cost of the increases to anyone earning less than £45,000.

The Chartered Institute of Personnel & Development (CIPD) has estimated that should the rise go through, 12% of employers would cut recruitment and 8% would make staff redundant.

The Centre for Economics and Business Research calculates the NI rise would cost 57,000 jobs.

Tom Hadley, external relations director at the Recruitment & Employment Confederation (REC), told Recruiter that the increase should not be implemented. “The increase in NI Contributions would be an extra barrier to job creation,” he says.