Call for u-turn

Four out of five firms suffer hit from NIC increase

Jonathan Reynolds: shares call for an emergency budget

Four out of five employers (81%) say the increase in national insurance contributions has had a negative impact on their business, including higher staff costs, forcing them to raise prices or cut investment.

The British Chambers of Commerce, which surveyed more than 1,100 UK employers, is calling for the rise in employer contributions from 13.8% to 15.05% to be immediately reversed for at least a year, as firms battle surging costs.

Hannah Essex, co-executive director at the BCC, said:   “Businesses are telling us that the rise in National Insurance contributions has been a body blow as they try to get back on their feet. 

“When firms are already facing a toxic mix of surging inflation, rising energy costs and supply chain disruption, this increase is very hard to swallow. 

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“The tight labour market is already pushing up staff costs and the NI rise has only served to exacerbate that pressure, without having a positive impact on recruitment.  

“With firms’ profits also taking a further hit, after two years of the pandemic, it is no surprise that their investment intentions are also weakening. 

“But it is not too late to change tack and push the increase back until firms are in a better place to take on the extra burden.  

“The costs crises facing firms and people in the street are two sides of the same coin. If we can ease the pressure on businesses, then they can keep a lid on the price rises. 

“Acting now will also put businesses in a better position to create the future profits needed to fill tax coffers.”   

Jonathan Reynolds, Labour’s Shadow Business Secretary, said: “The Government need to act and bring forward an emergency budget. Every day they delay is another day they are hurting British businesses.

“The Conservatives’ £9 billion tax hike on employers is hurting investment and is a tax on jobs at the worst possible time.

“Labour would bring forward an emergency budget, with a windfall tax on oil and gas producers to lower bills for families and support energy intensive industries. Our plans to cut taxes for small business would save firms up to £5,000 this year. Labour backs British business.”

As part of its demand for an emergency budget, the BCC is also calling for a cut in VAT on energy bills from 20% to 5% for a minimum of one year.  It wants free Covid tests reinstated for companies to ease the strain on productivity caused by persistent high absences.

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