by business editor Trevor Sturgess

Firms have urged the Government to scrap the planned rise in National Insurance Contributions, saying it will be a tax on jobs and recovery.

The British Chambers of Commerce (BCC) is lobbying Chancellor of the Exchequer Alistair Darling at this week’s Labour Party Conference in Brighton.

NI is due to go up in 2011. The BCC says the £2.65bn shortfall should be made up through public sector spending cuts, changes to public sector pensions and benefit payments.

It also wants the Government to extend the Enterprise Finance Guarantee Scheme, which has helped firms during the downturn and is due to end in March.

Many firms have benefited from the scheme, including Oil Drum, a Canterbury-based company that has developed a product for trucks that reduces carbon emissions and saves 10 per cent on costs and consumption. It has been granted £200,000 under the scheme to extend its technology from trucks to cars and vans.

The BCC also wants the Bank of England to raise the ceiling on its quantitative easing (QE) programme to £200bn, £25bn above its present level.

It says the restoration of the 17.5 per cent Vat rate - due to come into effect on January 1 - should be put back to January 4 to ease the challenge facing retailers and small firms during the busy Christmas period. It says this would ensure a minimum fiscal impact, while giving small firms an essential weekend to prepare.

BCC director-general David Frost said: “These are the views of thousands of companies on the front line of this recession – ministers must take note.

“With many businesses, and particularly small firms, still experiencing access to finance problems, there is clearly a need for the government to continue with measures that boost money supply. Extending good initiatives like the Enterprise Finance Guarantee scheme, and expanding the size and scope of the QE programme will help."