The Conservatives have described the chancellor's national insurance rises as a "tax on jobs".

Party leader Iain Duncan Smith said on Thursday the rise in national insurance would influence future pay negotiations.

Launching his party's attempt to counter the government's efforts to sell Wednesday's announcement, Duncan Smith sought to claim that it was a return to the days of Old Labour. The Budget, he said, represented the "final stripping away of the veneer of New Labour".

In a speech to the London Chamber of Commerce, he claimed Labour-intensive industries such as health, education and the police had been hit.

He predicted Gordon Brown's tax increases would damage competitiveness and make life more difficult for families.

Duncan Smith believes much of the cash raised in the Budget would have to go on funding the NI contributions of NHS staff.

"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 NICs increases for employers?"

"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. Will senior nurses not want a pay increase to compensate for the extra tax they are having to pay? The total cost could be a billion pounds," he warned.

The Tory leader accused the chancellor of closing his mind to genuine reform. "He is about to spend a lot of money on a system which is outdated, overly-centralised and incapable of using that money properly - 1970s methods used on a 1940s institution will not deliver 21st century standards," Duncan Smith said.