Results from research carried out by the British Chambers of Commerce (BCC), of more than 1,100 UK employers has uncovered a startling picture of the negative impacts from April’s increase in National Insurance contributions.
Four out of five employers (81 percent) say they have been impacted by the increase and higher prices, reduced investment and increased staff costs were among the main effects cited. Employers also expect wages to increase by a median average of 5% over the next year.
Respondents said the rise in employer contributions to National Insurance (NI) from 13.8 percent to 15.05 percent had increased staffing costs, forced some to put up their prices, and meant they would be limiting investment.
As part of its call for an Emergency Budget, Staffordshire Chambers and the BCC are calling for the rise to be immediately reversed for at least a year, as firms battle surging costs on multiple fronts.
Chambers are calling for action to give businesses a chance to keep a lid on rising prices, boost productivity and ease cost pressures thus creating an environment for investment.
The rise in NI contributions has not been helpful as firms struggle to recover from the effects of the Covid pandemic and businesses are already facing a toxic mix of surging inflation, rising energy costs and supply chain disruption making this increase very hard to swallow.
We are also experiencing a tight labour market which is already pushing up staff costs and the NI rise has only served to exacerbate that pressure, without having a positive impact on recruitment.
However, 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 directly related and 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.
The BCC measures for an Emergency Budget are:
- Postponing the rise in NI contributions to not only ease the immediate pressure on companies’ balance sheets but also put money back into the pockets of people – boosting consumer confidence. When supply chain disruption has unwound and global factors influencing inflation have receded the economy will then be in a much stronger position to bear the increase.
- Cutting VAT on business energy bills to 5 percent for all businesses which would provide a brake on soaring costs. For example: a small business which has an energy bill of £10,000 and currently pays the standard 20 percent rate would pay £2,000 VAT. Our proposal would see that cut to £500. This measure could be adjusted over time to take account of those sectors most in need.
- Many businesses in the UK are still seeing above average absence rates as Covid continues to impact the workforce. Around two thirds of more than 1,100 firms surveyed in April reported staff absences due to Covid symptoms or self-isolation. Bringing back free testing would allow firms to limit the disease’s spread among employees. With wider structural staff shortages continuing to limit productivity this would be a key measure to keep the economic recovery on track. New sub-variants of Omicron are reportedly leading to rising infection rates in the US and South Africa.
Our latest quarterly economic survey is now open
All the above only brings into sharp focus the importance of our own quarterly economic survey (QES) as a barometer of business sentiment across Stoke-on-Trent and Staffordshire.
The information you provide will help to shape and influence current policy thinking as the data is shared with the BCC, Government departments including HM Treasury and the Cabinet officer as well as the Bank of England.
As always, we want to hear from firms of all shapes and sizes (starts ups, sole traders, SMEs, medium sized and large corporations) as it helps to portray an accurate picture of the current business landscape. Whether you’re a seasoned director or relatively new to your company, it would be fantastic if you could spare just a few minutes to fill in the survey so that we can let those who make the decisions how they can improve business conditions.
The link to the survey is – https://bit.ly/3yG4fsD
If you want to talk to us about business issues highlighted above, or any other issues including funding, you can call our switchboard on 01782 202222 or call the Stoke and Staffs Growth Hub Helpline on 0300 111 8002 or email: info@staffordshirechambers.co.uk
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