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CBI conference: "Sentiment around hiring and growth has changed dramatically since the Budget"

ended 25. November 2024

At the CBI annual conference today, Chancellor Rachel Reeves, who is speaking at the event, will be told that the tax changes announced in the Budget will hit hiring and see businesses reduce their headcount. Newspage asked HRs, accountants and business owners if they, or the clients they work with, have stopped hiring. One accountant said: “There is no doubt in my discussions with business owners and management teams that the Budget has made hiring more expensive. Existing staff costs have increased substantially following the National Insurance rise and therefore hiring has been put firmly on hold.” Meanwhile, one business owner had invested in a larger office to hire new staff but is now outsourcing instead. A third said “we will no longer be able to give opportunities to young or inexperienced people due to the costs of hiring and the significant costs of investment in training that’s required to shape someone with no experience into a role you need of them. The minimum wage increases have just pulled the rug from under the youngest in our workforce.” 

6 responses from the Newspage community

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Rakesh DuaVerified
CEO at DUA Accountancy & Business Consultancy
There is no doubt in my discussions with business owners and management teams that the Budget has made hiring more expensive. Existing staff costs have increased substantially following the National Insurance rise and therefore hiring has been put firmly on hold. Many companies are looking at alternative ways of getting things done, in some cases through outsourced service providers wherever they may be based. This is not good for UK PLC. If we stop hiring or hire less, we will ultimately place an increased burden on the state. The Budget hampered growth and, just as importantly, took a sledgehammer to the sentiment and motivation of entrepreneurs. Many business owners are now asking themselves, why take the risk when the cards are stacked against us so much? Our economy needs growth not financial burden.
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Peter Lawrence0
HR Consultant / MD at Peter Lawrence
As an HR consultant who regularly speaks with and supports small businesses with people issues, I can say that the sentiment around hiring and growth has changed dramatically since the Budget. Many smaller firms are now extremely cautious about making hiring decisions. They are also concerned about the raft of employee protection and enhanced employee rights and the increased costs coming down the track. On the hiring front, it's a perfect storm for SMEs at present.
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Justin MoyVerified
Managing Director at EHF Mortgages
Our original plan was to recruit additional office support; we had even invested in a larger office to accommodate a larger team. However, the increased staffing cost and the additional employee rights proposed make it difficult to grow the team locally. Instead, we have looked at outsourcing admin tasks to an external company, which is taking employment outside of the local area.
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Debbie PorterVerified
Managing Director at Destination Digital Marketing
Undoubtedly hiring will go down as firms try to do more with what they have. We are a small business and one person added to our team is a huge percentage of the workforce, so we have to choose what we do with our wage bill wisely. It will mean that we will no longer be able to give opportunities to young or inexperienced people due to the costs of hiring and the significant costs of investment in training that’s required to shape someone with no experience into a role you need of them. It makes far more sense to find someone who already has experience tucked under their belt and that costs a little more. The return you get from day one, even with a ‘second jobber’, will show itself right away. The minimum wage increases have just pulled the rug from under the youngest in our workforce.
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Daniel WiltshireVerified
Actuary & IFA at Wiltshire Wealth
Unfortunately, the Budget prioritied politics over people. The cost of hiring no longer stacks up for many businesses. As usual it will be the young who will suffer most.
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Andrew Baker0
Managing Director at Soil Acoustics Ltd
As a small business seeking investment in a new technology that will revolutionaise the agricultural sector, recruitment is our biggest limiting factor. Our ecology business growth is only limited by the people we can hire, even sometimes having to turn clients away. We are an attractive prospect for recruits, have low staff turnover and often train our own, our Level Seven Apprentice placement student has just graduated.
The chancellor's policy on IHT has been designed to focus investment away from land and prooerty that simply drives up prices and to incentivise investment in business. The increase in NI does increase the tax burden, however any business who says they're not going to hire due to this is operating at the margins of profitability and should look very carefully at it's own efficiency. Furthermore they obviously don't understand the benefits to business of having a good education system, a well funded NHS or a transport system that meets the needs of a thriving economy.