Gordon Brown has been warned that his long-planned rise in National Insurance contributions is taking effect at the "worse possible time".

First announced in last year's Budget, a one per cent increase in national insurance for employers and employees will take effect on April 6.

A spokesman for the Tresury, said: "The one per cent increase in National Insurance Contributions is purely to fund extra resources for the NHS. As a result of the increase the NHS will receive the biggest ever sustained increase in resources in its history.

"The extra investment for the NHS in this parliament will buy 35,000 more nurses, 15,000 more doctors and 70 new hospitals and the extra spending will be matched by reform to ensure it is well spent.

"Business will benefit from the NICs increase too. The CBI estimate workplace absence cost British business £11.8 billion a year in 2001. And health costs are rising for businesses around the world.

"As Anthony Goldstone (the then President of the British Chambers of Commerce) said in his speech to the BCC annual conference last year (22nd April 2002): 'We in business know more than most the value of high quality health care and we pay a higher price than most when the NHS does not operate as it should. Now any of us in business know that we get what we pay for. If we want a world-class health service in the UK we need to pay more. The advance of medical science, new treatments, more advanced drugs mean costs are increasing.'"

Forum Response: British Retail Consortium

Bill Moyes, director general for the British Retail Consortium, told ePolitix.com: "We said at the time that the increase in National Insurance was a tax on jobs. We stand by that.

"The strength of competition on the high street means that the rise in National Insurance contributions will not be passed onto consumers, but will be absorbed. However, the timing could not be worse. Combined with the impact of an economic slump, the increased fear of terrorism, this tax will seriously reduce consumer demand.

"In the current retail climate, the industry cannot go on absorbing increases in taxation and cost. The chancellor needs to act to stimulate consumer demand, not suffocate the success of the one reliable engine of growth in the UK economy."

Forum Response: Barclays

Paul Morrish, savings and investment director at Barclays, said: "As the Treasury gets ready to take an estimated £4 billion a year in extra National Insurance contributions from April, over half (52 per cent) of UK adults are not aware that their contributions will increase, according to research by Barclays.

"Of the 48 per cent who are aware of the pending increase, almost one third (29 percent) do not know how much extra this will cost them per year.

"The lack of awareness is particularly prevalent amongst 18 to 24 year olds, where 81 percent of those surveyed did not know that they would be paying additional contributions. This compares to those aged between 45 and 54, where 64 percent were aware of the increase.

"Our research suggests that people are in for a shock when they get their first pay packet after the increase in National Insurance has come into force. No wonder it has been dubbed the 'forgotten tax'.

"In terms of minimising the impact, there is little people can do except make sure they are running their finances as tax efficiently as possible by making sure they use their ISA allowance, for example, or off-set their savings against their mortgage."

Forum Response: Institute of Directors

A spokesperson for the IoD told ePolitix.com: "This National Insurance hike is of particular concern to our members, with over three-quarters of businesses saying they will have to take action to absorb the cost. This includes reducing staff, curtailing future recruitment and holding down wage increases. This is quite simply a tax on employment that will benefit no one."

Forum Brief: GMB

John Edmonds, general secretary of the GMB, told ePolitix.com: "The CBI should come clean - are they not in favour for more money for the NHS? The CBI's scaremongering forecasts have been woefully wrong in the past including their prediction of mass job losses due to the introduction of the minimum wage."

Forum Response: Association of Chartered Certified Accountants

Chas Roy-Chowdhury, head of taxation for ACCA, told ePolitix.com: "The NIC increases due from the start of the new tax year are manifesto breaking. The creation of a new one per cent band enables government to avoid saying that the higher rate of income tax is now 41 per cent - which it effectively is.

"The increases themselves are disproportionate to businesses and older women who pay the reduced rate.

"Significantly more of the burden of the increase falls on the business as the employer pays the increase without an upper limit cap. Most businesses will need to think very carefully about head counts in the light of these increases as their overall costs are going to significantly increase."Those women who pay the reduced rate of NIC of 3.85 per cent will be affected by the heavy handed and disproportionate increase in their payment rate to 4.85 per cent. This is a 26 per cent tax hike for them where as other employees face a 10 per cent increase."