David Cameron was accused of timidity by business groups on Tuesday after the Conservative leader unveiled proposals for a £2.6bn tax cut for employers who hired jobless workers.

The Tory plan would offer a £2,500 national insurance holiday to employers for each new worker taken on after he or she had been out of work for three months or more. The plan is a “budget submission”, best implemented as Britain enters recession, rather than a proposal that an incoming Conservative government would introduce after a 2010 election, said Mr Cameron. The Tories insisted their proposal, designed to pre-empt expected tax giveaways by Gordon Brown, was fully funded from the benefits savings it would generate.