ONE in five businesses is planning to lay off staff in order to cope with the rise in National Insurance Contributions (NICs), it is claimed.

The British Chambers of Commerce made the claim following a productivity survey in which it quizzed nearly a thousand of its members, including some in Bolton and Bury.

Results show that the problem is greater for small and medium sized enterprises -- a third of which expect to cut jobs.

The survey looks at business attitudes to productivity, the barriers to increasing it and what companies want the Government to do to help them become more productive.

Kay Gregson, Bolton and Bury Chamber's director of customer services, said: "The rise in National Insurance Contributions is going to have a serious impact on local business. The fact that one in five employers are considering cutting staff to deal with this increase is a serious concern.

"Businesses are already over-burdened by red tape, business tax and skills shortages.

"We hope that the Chancellor will not attempt to raid depleted business coffers in his upcoming budget."

Twenty per cent of those surveyed said they were considering dealing with the rise in NICs by cutting jobs.

Another 15pc of firms were considering wage cuts in order to cope with the rise, and 17pc were thinking about reducing investment spending.

The Productivity Survey also found that around two-thirds of firms believe that the Government could improve UK productivity by reducing the tax burden on business. Nearly as many, 63pc, believe that reducing the regulatory burden on businesses would also help. Half of those questioned called on the Government to provide more incentives for training, 49pc wanted it to provide more incentives for investment, and 40pc believed that improving the transport system would help.

According to the survey, the top five barriers to productivity in the UK are business and insurance costs (51pc), the tax and regulatory burden (47pc), a shortage of skilled workers (36.4pc), uncertainty about consumer demand (35pc), and a lack of affordable finance (21pc).

UK businesses believe that other countries are more productive because they have fewer regulatory burdens (46pc), they have a more entrepreneurial culture (38 per cent), they have a more advantageous tax structure (37 per cent), and a higher-skilled workforce (36 per cent).

Eleven per cent of businesses have considered moving abroad.