Business leaders in Birmingham and Solihull were dismayed that the Chancellor decided not to abolish increases planned in National Insurance contributions.

Alistair Darling told the Commons that he would keep his plan to increase contributions from April 2011 by 0.5 per cent.

Katie Teadsale, head of policy at Birmingham Chamber of Commerce and Industry (BCI) said: "Our members were very clear in a recent survey that employment costs are the biggest deterrent to hiring new staff.

"Birmingham's unemployment figure of 12.8 per cent is the highest in the UK and we would have expected a freeze of National Insurance payments to encourage companies to recruit staff.

"The increase will only serve to be a tax on business that will stifle employment opportunities and growth. 

"But we welcome the measures announced by the Chancellor to tackle youth unemployment and to get mature people back into work but we will need to monitor how this progresses.

"It is vital that Job Centre Plus staff are able to fully implement and update their internal processes to make these proposals work on the ground.

"The real and lasting solution to tackling unemployment is encouraging the private sector to grow that is why the decision to increase National Insurance contributions will disappoint our members."

The BCI welcomed the extended time-to-pay scheme, which allows firms to spread tax payments and the deferral of corporation tax for smaller companies would be greeted with relief.

Added Ms Teasdale: "The extension of the Enterprise Finance Guarantee scheme for bank loans to small businesses for a further 12 months is to be welcomed.

"However, some companies have complained to the Chamber that even though they have been granted loans the process of receiving has been too slow for them to be effective."

The decision to continue with an increase in VAT in the first week of January will be an enormous headache for retailers as they struggle to update their systems and contend with the crucial January sales. A delay to mid-January at the earliest would have been preferable. 

The Chancellor's decision to restrict the new internship scheme, which offers financial support to the 10,000 poorest students, highlights the lack of funds available to the Chancellor.

Mr Darling's measures to prevent excessive bonuses by banks was a distraction from the real issues, said the Chamber.

Ms Teasdale said: "The banks and the whole financial services sector will have a key role in securing any recovery. We need to take care to ensure that measures like this do not make our financial services sector less competitive internationally, hindering inward investment to the UK."

The BCI backed the government's decision to maintain and increase investment in vital business infrastructure such as energy and high-speed broadband. 

"While we welcome the new lower 10 per cent corporation tax rate for profits derived from UK patents which will support R&D, we await the detail and are looking for the government to take the lead in helping to creating a demand for low carbon technology similar measure taken in the US," said Ms Teasdale.