South West businesses fear big hit from National Insurance rise
Some business owners in Devon and Cornwall are worried a hike in National Insurance (NI) payments paid by employers could be "a hammer blow".NI contributions paid by employers will rise from 13.8% to 15% from Sunday, with the threshold traders have to start paying the tax on salaries dropping from £9,100 per year to £5,000.Among those criticising the move was Natalie Moore, from the Pickwick Inn at St Issey near Padstow, who said traders were already facing "crippling" costs.The government said it had taken "the necessary decisions on tax to stabilise the economy" and the changes would eventually raise £25bn per year.
Chancellor Rachel Reeves had said among the changes were a rise in the employment allowance, which allows firms to reduce their NI liability, from £5,000 to £10,500.Outlining her situation, Ms Moore said the changes would cost more than £40,000, with staffing being the biggest financial hit."People sometimes ask us, 'how can you charge that much for the food?', but it's not the food, it's the people serving you or washing up where the cost comes," she said. "It's another hammer blow at a time when energy prices are crippling... the cost of living crisis is taking a huge hit not just hospitality, but on everything."Food prices are through the roof and it's a time when you really can't pass it on to the customer because disposal income is pretty much non-existent for lots of people."
'Stumbling block'
Padstow Boatyard owner Will Claxton said the changes would make a "big difference" but in a negative way.Mr Claxton said he already paid his staff more than the living wage, currently at £12.21 for over-21s, but added he would not be able to give pay rises due to the changes.He said the hike was a "stumbling block" and doubted whether he would be able to take on any apprentices this year."We desperately, desperately need to train up some skill in this country, but now that's just been made a lot more difficult," he said."As a business owner, it feels like the government see as driving around in Range Rovers going to play golf."But actually, we're really hardworking people who are really just trying to keep people employed and keep things going."
Sally Everton, director of Visit Devon, said a lot of tourism bosses in the county had told her the NI changes would affect their ability to invest in their businesses or employing seasonal staff."Some people have said they might be able to limp through the summer, but whether it's viable to continue is a real concern," she said."The government's policy is growth, but this is not going to help growth across our sector, so it's very short-sighted."
Jeff Goodwin, owner of Jeff Goodwin Hair in Exeter, said his business would not be affected too much due to the size of his salon, which has seven employees.He said the changes would have a wider impact on the industry and some salon's would struggle.The salon owner of 41 years said a bigger concern were costs such as VAT and product prices."Keeping up with that and still managing to balance the books, if we put the prices up and pass it on to the customer, then they might comes less often or not come at all," he said."So we have to strike a balance all the time between absorbing costs and passing them on to the client."
'Creating opportunities'
The government said it appreciated the "vital importance" of small businesses to the UK economy, adding it had achieved a "great deal" since the last general election.A spokesperson said: "We delivered a once-in-a-parliament Budget that took necessary decisions on tax to stabilise the public finances, including the NHS which has now seen waiting lists fall five months in a row."We are now focused on creating opportunities for businesses to compete and access the finance they need to scale, export and break into new markets."
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