Chancellor Gordon Brown's 1p National Insurance (NI) increase is a tax on jobs, Iain Duncan Smith has said.

The Conservative leader told the London Chamber of Commerce that the paradox of the increase was that it was aimed at improving the NHS - Europe's biggest employer.

The chancellor's Budget speaks volumes about his attitude to small businesses Iain Duncan Smith

It would therefore be one of the biggest victims of the NI hike because it would have to pay extra contribution for each of its employees.

Mr Duncan Smith argued that other big public services employers such as the police and the education system would also be hit.

"The NHS is Europe's largest employer. Well over half its total costs are staff costs," the Tory leader said.

"How much of yesterday's NHS funding increase will be eaten up by NI increases for employers?

'Own goal'

"And what of employees? A senior nurse will now be more than �300 a year worse off as a result of yesterday's tax changes."

The upshot of this, he argued, was that senior nurses may well decide to demand a pay increase.

"The total cost could be a billion pounds," he said.

Mr Duncan Smith referred in his speech to Thursday's visit by Prime Minister Tony Blair and Chancellor Gordon Brown to London's Chelsea and Westminster Hospital.

There, consultant Peta Longstaff accused the pair of scoring an "own goal" by raising tax for low-paid doctors and nurses.

Burden?

"No wonder Tony Blair and Gordon Brown got a warmer reception than they were hoping for," he said.

"She [Dr Longstaff] was right to tell the chancellor he had scored 'an own goal' by raising National Insurance on poorly-paid NHS staff.

"And that is not the only own goal he has scored.

"The chancellor's Budget speaks volumes about his attitude to small businesses, many of them already struggling to survive under the burden of regulations he has imposed."