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Businesses have hit out at a possible increase in national insurance contributions paid by employers, arguing it would make it harder to recruit staff and create new jobs.
Leading business groups in the UK have raised concerns about a possible tax rise – something Prime Minister Sir Keir Starmer did not rule out in an interview with the BBC on Tuesday.
Some have warned that an increase in national insurance for employers would “hamper” economic growth, while one pressure group claimed it would “hammer” the hospitality sector.
Labor has declared itself “pro-business” and wants to boost economic growth, but Sir Keir warned the October 30 budget “will be tough”.
The CBI, one of the UK's main lobby groups which claims to speak on behalf of 170,000 businesses, has suggested that businesses have suspended hiring new workers and investments while awaiting the government's tax and spending plans. government.
Rain Newton-Smith, director general of the CBI, told the BBC's Today program that employers would view an increase in national insurance as a “difficult decision” that would “increase the cost of hiring”.
This comes on top of “large increases” in the national living wage in recent years.
Kate Nicholls, chief executive of UK Hospitality, said any increase in national insurance “would particularly hit sectors like hospitality, where staff costs are businesses' biggest expense”.
Alex Veitch, policy director at the British Chamber of Commerce, acknowledged that the government had to make “difficult decisions” on the budget, but warned that increasing employers' national insurance contributions “would not that hinder growth and would lead to companies having less money to invest in their staff.
“People who work”
Some have questioned whether Labor has abandoned its commitment not to raise taxes, including national insurance.
On Monday, Chancellor Rachel Reeves said Labour's election pledge not to increase “workers'” national insurance was linked to the employee element, as opposed to the amount paid by businesses.
“Businesses are run by workers,” Veitch said. “Almost all British businesses are small, with many family businesses, and they are the pillars of our local economies.”
Craig Beaumont, executive director of the Federation of Small Businesses, said: “You won't achieve a small business-friendly Budget without the Government honoring its manifesto commitment not to increase National Insurance contributions, including for small employers. »
He added that an increase in national insurance would “make it more expensive to maintain every job in all our local communities”.
Speculation is growing over what Labor will announce in its first budget for 15 years at the end of this month.
The chancellor says there is a £22bn “hole” in the public finances and some taxes will be increased.
National Insurance is paid by employers, at 13.8% on their staff's earnings above £175 per week.
Furthermore, the government could decide to introduce a national insurance levy on pension contributions paid by employers. Currently, it is tax free.
Veitch said any tax increases should be “countered” with measures to encourage investment, particularly for small businesses.
