Labour is waging an open war on businesses

Telegraph

14-03-2025

Whenever I speak to small business owners in Fareham and Waterlooville – or anywhere across the country, for that matter – the conversation quickly turns to how they are coping under the new Labour Government.
From cafés and pubs to dry cleaners and hairdressers, the story is the same: they are struggling. And not in a vague 'times are tough' sort of way. It is much worse than that. They are struggling in the 'we may not survive this' way.
The first hammer blow comes in the form of Labour's changes to employer National Insurance contributions (NICs). From April 1st, the rate rises from 13.8 per cent to 15 per cent, while the threshold for contributions drops from £9,100 to £5,000.
The British Chambers of Commerce estimates that nearly a million businesses – overwhelmingly SMEs – will be forced to make difficult choices as a result. Some will cut back hiring. Others will slash wages or working hours. Many will simply close.
Take the case of one local restaurateur I spoke with. He is a man who has spent 20 years building up his business. He told me he will have to entirely shut one of his three branches. The others, meanwhile, will have to cut their opening hours simply to cope with the sheer weight of staffing costs.
For employers in sectors like retail and hospitality – where payroll is a huge proportion of overheads – this will be devastating. The Office for Budget Responsibility estimates that these changes alone will add nearly 2 per cent to payroll costs. For an employee on a £50,000 salary, that's an extra £1,106 per year in tax for the employer.
This will lead to a slower economy, a weaker labour market, and fewer opportunities – particularly for those on low wages. Labour claims to be the party of workers. In fact it is actively sabotaging the very businesses that employ them.
And if the NIC hike was a kick in the stomach, Labour's Employment Rights Bill is a strangulation. It is a trade unionist's dream; it is written in the language of 1980s class warfare.
Listening to Labour MPs in Parliament this week, you could be forgiven for thinking that Arthur Scargill was about to triumphantly march through the chamber. Their worldview remains binary: bosses bad, workers good. And this Bill is a revenge fantasy that punishes employers for a variety of imagined sins.
The measures are staggering in their economic illiteracy. Day-one unfair dismissal rights for employees – once a safeguard earned after two years of service – will now be automatic. This means small business owners, already facing punishing tax hikes, will also find it harder to dismiss underperforming staff. They will think twice before hiring anyone at all.
For those using zero-hours contracts – a lifeline in sectors like hospitality – Labour has also decided to interfere. SMEs will be forced to guarantee hours after just 12 weeks of work. At the same time they will be hit with compensation costs for last-minute shift changes. The reality of this will be fewer flexible jobs and fewer work opportunities for young people.
The Government's own impact assessment is damning: £5 billion in new costs for businesses over the next decade. The Regulatory Policy Committee rated the Bill as 'not fit for purpose.'
And then there is the naked power grab for the unions. Labour is handing them everything they have ever wanted. The minimum notice period for strikes is being cut from 14 to 10 days; this makes it even harder for businesses to plan ahead.
Strike mandates will now last for a year instead of 6 months – effectively ensuring prolonged disruption. Union officials will also be given greater access to workplaces. This gives them free rein to organise and agitate.
The results will be predictable: more strikes, less productivity, greater costs for business. At a time when Britain needs to be leaner, more competitive and more flexible, Labour is doing the opposite – dragging us back to the sclerotic economic model of the past.
And yet, when challenged on this, Angela Rayner couldn't name a single business that supports the Bill. Not one. The silence was deafening. That's not because businesses are shy about their view – it is because Labour has waged open war on them.
The consequences of these policies will be severe. Hiring freezes, closures, job losses, inflationary pressures – Labour is setting up Britain for economic ruin. Will they realise before it's too late? Or will they continue their crusade against the very businesses that keep this country running?