by Myles Neligan BBC News Online reporter at the BCC Conference

UK Trade and Industry Secretary Patricia Hewitt has defended tax increases aimed at boosting health spending, saying businesses will benefit from the investment too.

Ms Hewitt told the annual conference of the British Chambers of Commerce that an improved public health system would help to reduce sickness absence by employees.

The BCC estimates the cost of sickness absence to businesses at �10bn a year.

Ms Hewitt said that raising the extra cash through direct taxation would work out cheaper than introducing a European-style social insurance system, where employers bear a high proportion of their workers' healthcare costs.

Tax on jobs

But she acknowledged that the government's plans to raise employer national insurance (NI) contributions - unveiled by Chancellor Gordon Brown in his 2002 Budget last week - had come as "an unwelcome surprise".

Business groups have condemned the higher NI rate as a "tax on jobs".

They argue that the increased contributions were unfair because they would affect all firms equally, irrespective of whether they were in profit or not.

The Confederation of British Industry has estimated that the higher contributions will cost UK businesses an extra �4bn a year.

"Of course it's going to mean a rise in wage costs," Ms Hewitt said.

"But you know how much the whole business loses out if someone goes ill and has to wait for the right treatment."