Increased spending in the NHS announced in the budget has been welcomed by some in the timber sector, but chancellor Gordon Brown’s decision to increase employers’ National Insurance (NI) contributions by 1% has been called a ‘tax on jobs’ .

Mark O’Brien, the Timber Trade Federation‘s (TTF) head of public affairs, said: ‘It’s extremely difficult to reconcile the chancellor’s recent comment that ‘creating the right environment for business is central to everything the government does’ with the decision to increase NI contributions from 11.8% to 12.8%.

‘Business has spent the last five years coping with an increasing burden of red tape and ever more regulation, and is now faced with an effective tax increase on jobs.’

The TTF also expressed disappointment that there was no change in VAT on repair and maintenance of domestic property, plus no widening of the range of energy-efficient products eligible for reduced VAT . These are both issues the for which the TTF has supported the campaign of the Construction Products Association.

Mr O’Brien said the return to ‘tax and spend economics’ will worry many in the business community. However, he welcomed the freeze on fuel prices, an issue the TTF recently said was the number one issue for the UK timber trade.

Meanwhile, the British Woodworking Federation (BWF) welcomed the substantial increase in NHS expenditure, the equivalent of £40bn over five years, as having a favourable impact on the demand for members’ products, especially doorsets, windows and architectural joinery.

However, BWF director Kevin Cubbage also thought the NI increase, effective from April 2003, would cause concern.

He said: ‘Taxing jobs in this way will make BWF members think even more carefully before they take-on additional employees.’