The British Chambers of Commerce (BCC) has warned that 8 out of 10 British companies will be forced to reconsider their future strategies when the proposed increase in the national insurance policies of employers is in force, so that “powder costs” for companies are brought.
In a recent poll, 82 percent of BCC member companies said that the higher tax burden will ask them to re-visit their operational plans, while 58 percent expect a negative effect on recruitment and 54 percent expect them to increase their prices. More than a third (36 percent) are of the opinion that the turnout will stop investments.
Chancellor Rachel Reeves announced in the budget of October that the national insurance policies of employers will rise by 1.2 percentage points to 15 percent from April, in addition to a reduction in the annual salary threshold with which companies start paying national insurance policies, from £ 9,100 to £ 5,000. Ministers predict that these movements will pick up £ 25 billion a year by the end of the decade.
Reeves has defended the measure as “the right choice to make”, and insists that “successful companies depend on successful schools, healthy companies depend on a healthy NHS and a strong economy depends on strong public finances”.
However, managers, in particular those in sectors with lower margins, such as retail and hospitality, have criticized the rise, and it mentions as a costs on top of reforms in the rights of employees and higher minimum wage. In a letter to Reeves in November, more than 70 high-profile retailers and Tesco, Marks & Spencer, Sainsbury’s, Asda and the following rising costs ‘inevitable’ released to lose loss of jobs.
The BCC, which operates 51 rooms throughout the country and investigated around 1,300 predominantly small companies (fewer than 250 employees), also brought that many companies are dissatisfied with the wider policy of the government. Almost 80 percent were of the opinion that new policy effects are not correctly assessed.
Alex Veitch, the BCC policy director, said that the survey points to companies that “are on a powder jug of costs”. He noted that most companies “have to increase prices and reconsider recruitment plans”, a situation that he could, according to economic growth, undermine economic growth – an important government priority.
Veitch added that the government “pauses for thinking” about continuing its national insurance strategy for the duration of this parliament and insisted on “urgent” rates for reform. He also brought concern about the planned expansion of legislation on labor rights and said: “Some proposals are completely disproportionate to the reality of how companies work.”
Jonathan Reynolds, the business secretary, met business leaders in London this month and acknowledged that the last budget “asked a lot of company”. However, he emphasized that these measures are essential for repairing public finances and financing infrastructure improvements, which in his opinion will strengthen the competitiveness of the UK in the long term.
Ministers point to major obligations, such as support for a third runway in Heathrow, infrastructure developments in the Oxford-Cambridge-Gang and the launch of the National Wealth Fund as proof that the government remains focused on growth.