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It's our worst NIGHTMARE: Business braced for 'perfect storm' in Halloween Budget By Hugo Duncan and Emily Hawkins Updated: 18:22 EDT, 29 October 2024 e-mail 1 View comments Rachel Reeves was last night accused of turning her back on economic growth as business braces for a Budget onslaught that will drive up costs and threaten livelihoods. The Chancellor will today hit corporate Britain with an increase in employer national insurance contributions of up to 2p having previously branded the levy a ‘tax on jobs’. The national insurance raid – which could raise as much as £20billion – comes alongside an inflation-busting 6.
7 per cent increase in the minimum wage and a workers’ rights package costing firms £5billion a year. Cash call: Rachel Reeves will today hit corporate Britain with an increase in employer national insurance contributions of up to 2p having previously branded the levy a ‘tax on jobs’ The Institute of Directors described the triple-whammy as a ‘perfect storm’ while the Institute for Fiscal Studies (IFS) said the higher costs facing business could cost jobs. Former CBI president Lord Bilimoria, the founder and chairman of Cobra Beer, accused the Government of abandoning its pledge to put economic growth at the heart of its plans.
‘This Budget is going to be many of our worst nightmares coming true,’ he told the Mail. ‘They keep talking about growth, but they are doing everything to stop growth. Every measure they are taking is going to stifle growth.
It’s going to be a huge burden on business and a damper on investment. National insurance is a tax on jobs.’ Nick Mackenzie, chief executive of pubs group Greene King, said: ‘There are some cost increases coming through that are hitting our industry and hitting our businesses, and potentially having an effect on our ability to invest in growth in the long term.
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Share this article Share HOW THIS IS MONEY CAN HELP How to choose the best (and cheapest) stocks and shares Isa and the right DIY investing account The Budget will leave Labour facing claims it has breached its manifesto pledge not to ‘increase taxes on working people’ or raise national insurance, income tax or VAT. While Labour insists this only covered national insurance on employees, not employers, critics said working people would still be hit through lower pay and lower job prospects. ‘I can’t think of any tax that doesn’t affect people who work,’ said IFS director Paul Johnson.
Xiaowei Xu, senior research economist at the IFS, added: ‘If the Government enacts a combination of a rise in the minimum wage, an increase in employer national insurance and the worker rights bill, businesses may respond by reducing employment.’ Labour last week revealed its workers’ rights package – including flexible working, paternity and sick leave from day one – will cost businesses up to £5billion a year. Ministers last night announced a 6.
7 per cent rise in the minimum wage to £12.21 per hour with a 16.3 per cent increase for under-21s to £10 an hour, leaving business facing yet higher costs.
And the rise in national insurance is set to be one of the major revenue raisers. Alexandra Hall-Chen, an employment expert at the Institute of Directors, said: ‘Any one of these factors will have a significant impact on business costs. ‘Taken together this is something of a perfect storm for business and will be a considerable disincentive for employers to hire new staff.
We urge the Government to consider the combined impact of these policies and adhere to its pro-growth and pro-business mission.’ Kate Shoesmith of the Recruitment and Employment Confederation said: ‘Businesses have set out to us and the Government their concerns over their ability to continue to operate if there are further substantial increases to their cost base in the short-term.’ Business rates 'cliff edge' plea from firms The Chancellor was last night urged to save firms from a business rates cliff edge – and stick to her pledge to reform the broken system for good.
Pubs and shops face a £2.5bn increase in their business rates bill when Covid-era support expires at the end of March next year. Business leaders warned an increase on this scale – while they struggle with rising wages and taxes, as well as new red tape on workers’ rights – would force many to put up prices or shut down.
In a last-ditch plea to Rachel Reeves last night, they called for the support to be extended, with Nick Mackenzie, boss of pubs group Greene King, warning of a ‘cliff edge that could be really damaging to pubs’. Industry leaders also demanded sweeping long-term reforms of the ‘broken’ rates system to make it fit for the future. Business rates are a levy based on the value of a commercial property – meaning shops pay a premium compared with online giants such as Amazon.
For decades, businesses have been calling for permanent reform to level the playing field. But industry sources expect to be disappointed with a vague announcement of merely another review or consultation. Michael Murray, chief executive of retail giant Frasers Group, said the current regime was almost ‘unviable’ with rates costing as much as rent.
Chris Jowsey, boss of Admiral Taverns, said: ‘It is incredibly important the Government not only provide an extension to the small business rates relief, but a reform of the unfair business rates system at the budget today.’ DIY INVESTING PLATFORMS AJ Bell AJ Bell Easy investing and ready-made portfolios Learn More Learn More Hargreaves Lansdown Hargreaves Lansdown Free fund dealing and investment ideas Learn More Learn More interactive investor interactive investor Flat-fee investing from £4.99 per month Learn More Learn More Saxo Saxo Get £200 back in trading fees Learn More Learn More Trading 212 Trading 212 Free dealing and no account fee Learn More Learn More Affiliate links: If you take out a product This is Money may earn a commission.
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