(qlmbusinessnews.com Wed. 16th Oct, 2024) London, UK —
Potential National Insurance Hike Sparks Concerns from UK Businesses
UK businesses are expressing growing concern over a possible increase in National Insurance contributions paid by employers, fearing it could hinder job creation and hiring. The issue has sparked debate following Prime Minister Sir Keir Starmer's refusal to rule out such a tax rise during an interview with a reporter this week.
Business leaders warn that any increase would stifle economic growth, with the hospitality sector especially vulnerable. Labour has maintained its pro-business stance but cautioned that the upcoming 30 October Budget will be challenging.
Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), which represents 170,000 businesses, told the reporter that raising National Insurance would increase the cost of hiring. She noted that employers are already grappling with rising National Living Wage rates and high energy bills.
Kate Nicholls, chief executive of UK Hospitality, added that such a move would have a particularly negative impact on sectors like hospitality, where labour costs form the bulk of expenses. Alex Veitch from the British Chambers of Commerce echoed these concerns, warning that higher employer National Insurance contributions would limit growth and leave businesses with fewer resources to invest in staff.
The government has yet to clarify exactly how National Insurance could be adjusted, with speculation ranging from increasing the existing levy on payrolls to introducing a new tax on employer pension contributions.
Meanwhile, some critics question whether Labour will honour its pledge not to raise taxes, including National Insurance. Chancellor Rachel Reeves has clarified that Labour's manifesto promise referred specifically to the employee portion of the tax, rather than the employer side.
Businesses, particularly small firms and family-owned enterprises, are hoping for a pro-business Budget. Craig Beaumont, from the Federation of Small Businesses, warned that increasing National Insurance would drive up the cost of maintaining jobs across local communities.
Speculation continues to swirl around the potential measures the government will take to address the £22bn hole in public finances. National Insurance is the UK's second-largest source of revenue, and a one percentage point rise in the employer rate could generate up to £8.5bn annually, according to the Institute for Fiscal Studies.
However, the broader economic impact remains unclear, with concerns that employers might curb wage increases or reduce pension contributions to offset higher costs.
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