One of the biggest fault lines between Labour and the Tories in the election battle surrounds their respective positions on National Insurance.

From next April, Labour says, if re-elected it would increase NI contributions for employers and employees by 1% – based on staff earning £20,000 or more.

However, the Tories, who have seen an increasing number of leading UK executives backing its position, said it will be able to resist most of the planned increase by driving £6bn of efficiency savings,

Both Labour, the Liberal Democrat and Plaid Cymru are sceptical of the Tories efficiency claims, on top of what they have already promised, fearing it will result in job losses and heighten concerns over a double dip recession

But what of businesses and business organisations in Wales?

Simon Thomas, managing director of Newport-based manufacturing company Asset International said: “As a manufacturing company that found the recession particularly tough, the rise in national insurance will come as another hard blow to us. The 1% increase will affect our workforce as well as the company and seems unfair as everyone has worked so hard and made financial sacrifices to keep the number of redundancies made over the last two years to an absolute minimum.

“We felt the effects of the recession most with the collapse of the new-build housing market and as a result trained staff to redeploy them to different areas of the factory in order to save jobs. It seems that any profits we have managed to recoup in doing this will now go to fund the increased national insurance payments.

“We had plans to recruit skilled workers in the next 12 months, but we may have to rethink this strategy as a result of the national insurance rise.”

Teifion Davies, managing director of Swansea-based IT company BSS said: “There are arguments suggesting that Labour’s NI proposals will have no real effect on employment. It has also been argued that ‘healthy’ businesses will continue to employ regardless of the additional costs – but my reaction to both of these sweeping statements is to vehemently disagree.

“Labour’s NI proposals are essentially a tax on jobs, and with the growing number of key business leaders backing the Conservative proposals I believe the majority of small businesses owners in Wales will be of the same opinion. As businesses here and across the UK are continuing to fight to get back on their feet, this proposal will do nothing to increase the strength of small businesses in Wales.”

Director of the IoD in Wales Roger Lloyd Griffiths said; “We and business organisations have been arguing against the proposed NIC hike since it was first announced in last autumn’s Pre-Budget Report, long before the Conservatives announced their policy.

“We welcome the fact that the Conservatives have now decided to support a reversal of the hike, but they are ‘late to the party’.

“Business has taken a view on the need for a reversal of the NIC hike without influence from political parties and has been deceived by no one.”

Steve Theaker, senior partner at South Wales chartered accountants UHY Peacheys, said: “The proposed 1% rise is a payroll tax on both sides that Labour hoped would go relatively unnoticed in the Budget as it isn’t planned to take effect until 2011. Instead, it has become one of the main talking points of the general election campaign.

“It isn’t just businesses that will feel the effects of the rise. Although 1% doesn’t sound much, it will be felt in employees pay packets across Wales. The rise will certainly put a break on the economy as pay rises and recruitment will be heavily affected. Businesses have a limited pot of money allocated to this and it won’t stretch as far if this comes into force.”

Denise Morris, director of Llantarnam-based HR and training consultancy 4-ward Development, said: “We are a relatively new company and an extra 1% spent on National Insurance is money deducted from our profits, which is revenue we desperately need to continue to grow and sustain our business. If this tax increase is implemented, it will also make us more cautious when it comes to recruiting and expanding our team, which has a negative effect on job creation. For any enterprise in its early stages of business, this ‘employment tax’ could stifle natural growth and prove to be an additional obstacle for SMEs at a time when we need all the support we can get.”

Bill Mayne, chief executive of Cardiff-based business services group MSS, said: “Adding to the cost of employing people in private sector now in order to defer tough decisions on public sector waste is simply wrong.”

In a tweet on social networking site Twitter chief executive of Cardiff-headquartered and Aim listed PR and marketing group Freshwater, Steve Howell said: “National Insurance increase adds 0.5% to Freshwater’s costs. But nearly 25% of revenue is from public sector clients. Enough said?”

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