Business leaders have condemned the second National Insurance hike as a tax on jobs.

One of the most controversial features of yesterday’s (9) Pre-Budget Report - described in one headline as all about “Bingo, Boilers and Bonuses” - was Chancellor Alistair Darling’s decision to increase NI by a further 0.5 per cent, on top of the 0.5 per cent already announced.

Jo James, chief executive of Invicta Chamber of Commerce, covering firms in Ashford, Maidstone, Canterbury and West Kent, said it would add yet another burden to business.

The NI hike, to be introduced in 2011 and designed to cut the burgeoning national debt, would come at the same time as a one per cent increase in corporation tax on small firms.

She said: “This surely will not stimulate the much needed employment growth, at a time when we should just be coming out of recovery.”

Simon Warne, Kent tax partner with accounting firm Horwath Clark Whitehill, with offices in Maidstone and Tunbridge Wells, said the NI rise would mean increased pain for every employer and employee earning more than £20,000. “Unless your pay rises accordingly, you will be taking home less money every month,” he said. “As such, it is an income tax rise in all but name.”

Targeting “pantomime villain” bankers would be well received outside the City of London, he added. “With next year’s General Election looming on the horizon, Alistair Darling has avoided the temptation to clobber the rich en masse.”

Mike Lazenby, chief executive of Kent Reliance Building Society, said almost everybody would be worse off. There was nothing in it to help building societies. As for bank bonuses, the Chatham-based society was not paying any this year and that included himself. “The banks should adopt that attitude,” he said.

“There is absolutely nothing that will help Kent Reliance serve its members better. If anything, if will make it increasingly difficult for us because of more regulation and higher National Insurance.” He added: “It was an election manifesto that does absolutely nothing for most men and women in the street. Even people on relatively low incomes will be worse off.”

He warned that higher taxes could lead to talented people leaving the UK. “It will be like the brain drain of the 1960s,” he said.