The impact of tax rises introduced in last month’s budget will make it more difficult for employers to hire, according to the Confederation of British Industry.
At its annual conference today (25 November), CBI chief executive Rain Newton-Smith will tell delegates that the increase in employers’ national insurance contributions, along with the lowering of the threshold at which they have to pay them, will make them less likely to “take a chance” on a new recruit.
“The rise in national insurance and the stark lowering of the threshold caught us all off guard,” she will say.
“Set alongside the expansion and rise of the national living wage… and the potential cost of the Employment Rights Bill changes, they put a heavy burden on business.”
Budget impact
Newton-Smith will also warn chancellor Rachel Reeves that companies will be forced to cut investment in learning and development.
“[Firms] are looking with heavy hearts to cut training and investment, delay decarbonisation projects, or pass on costs to customers,” she will say.
“Profits aren’t just extra money for companies to stuff in a pillowcase. Profits are investment. When you hit profits, you hit competitiveness, you hit investment. You hit growth. Tax rises like this must never again simply be done to business.”
The CBI’s warning today comes after a group of retailers wrote to the chancellor last week warning that they would suffer £7bn in extra costs that would lead to job losses, price rises and even shop closures.
Newton-Smith will also use her speech today to urge the government to consider reforms that will improve economic growth, such as offering more flexibility to use apprenticeship levy funding for wider training.
Reeves will also speak at today’s conference, and will tell the CBI that she had “no alternatives” but to raise public funds through employer-led tax rises.
“We have asked businesses and the wealthiest to contribute more. I know those choices will have an impact. But I stand by those choices as the right choices for our country: investment to fix the NHS and rebuild Britain, while ensuring working people don’t face higher taxes in their payslips,” she will say.
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