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Business owners put hiring on hold ahead of Budget NI decision: "Make no mistake, this government is gambling with the UK economy"

ended 28. October 2024

Business owners have said they have put hiring on hold and accused the government of “gambling with the economy” ahead of this week's Budget, with concerns around an NI increase a key driver.

One, Steven West, MD at The Pudding Compartment, said: Any increase in NI is clearly taxing existing and new jobs so our plans to grow the business and create jobs will need to be reviewed."

Another, Rohit Kohli, Director at The Mortgage Stop, said: “We're holding off on recruitment decisions until we see what the Budget brings. The potential increase in employers' NI could make hiring more costly, and from the rhetoric we've heard so far, it seems this government doesn't fully grasp what small businesses need. Increased tax burdens risk stifling growth rather than encouraging it. Make no mistake, this government is gambling with the UK economy.”

Meanwhile, another business owner warned that if the Government gets this Budget wrong, more businesses will go under: ”Unless the Government introduces protection measures for small businesses in line with tax hikes and changes in legislation, more will fail."

10 responses from the Newspage community

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Rohit Kohli
Director at The Mortgage Stop
We're holding off on recruitment decisions until we see what the Budget brings. The potential increase in employers' NI could make hiring more costly, and from the rhetoric we've heard so far, it seems this government doesn't fully grasp what small businesses need. Increased tax burdens risk stifling growth rather than encouraging it. Make no mistake, this government is gambling with the UK economy.
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Steven West
MD at The Pudding Compartment
Small businesses like ours are a resilient lot. We have to be in order to survive, especially in the food sector. We've had pandemics, and energy crisis, supply chain failures and shortages, food Inflation, the cost of living crisis and wage inflation... the list goes on. Just when we think we have turned the corner back towards stability and maybe even a bit of profit, bang, here we go again. Now we have the first budget from the new government this week and it looks like the next wave to hit us will be increases to Employer NI. We employ 26 people so this means we need to find a way to reduce our payroll by about 30 hours a week just to stand still, and this is without any other measures yet to be announced. Our customers can't tolerate yet another price increase so it looks like we are on our own with this one. Any increase in NI is clearly taxing existing and new jobs so our plans to grow the business and create jobs will need to be reviewed.
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Mr Owrang Rahmani
MD at Credius Wealth
Adding costs to employing staff for businesses at the moment seems a very ill-thought through approach, in particular for smaller businesses where staff costs are a significant part of overall costs. Most are feeling the pinch of an economy that seems to be slowly stagnating, with little growth prospects or positivity. This is on top of recent increases to Corporation Tax brought in by the last goverment, and more stringent rules in relation to employment, all add up to an increasingly difficult climate for small businesses, which are the lifeblood of the UK economy, to thrive.
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Jill Poet
CEO at Organisation for Responsible Businesses
In principle, I am not averse to increased employers' NI or the Workers' Rights Bill. What angers me, and what I believe is a huge miscalculation by the Chancellor, is failing to make allowances for the impact this will have on small businesses. The biggest irony here is that the Government is not interested in micro businesses unless they are on a fast-growth trajectory. These changes will make start-ups and micro businesses even more wary of employing anyone and thus stagnate potential growth. Unless the Government introduces protection measures for small businesses in line with tax hikes and changes in legislation, more will fail. This will then potentially add an increased burden onto the state. To authentically align environmental, social and economic impacts, we need to support small businesses. Small business owners are not classified as workers, but we need to remind the Chancellor that these people are in fact some of the hardest workers you will ever meet.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Increasing NI contributions may not lead to employers not recruiting, but it will ultimately increase the end price of the good or service that is being sold, which is inflationary. The more I hear the PM or Chancellor speak, the more I am convinced they are out of their depth.
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Justin Moy
Managing Director at EHF Mortgages
In one fell swoop, this government will drive mass unemployment and kill small businesses. This will increase the need for state benefits, drive down tax revenue and eventually bring the country to its knees. When the UK relies so much on smaller businesses, why does the government want to penalise those who take all the risk?
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David Stirling
Independent Financial Advisor at Mint Wealth
Any increase in employers' NI will be a massive blow to SMEs who are already struggling with tax hikes and general fatigue in the economy. The next fortnight could forge the future of the UK economy for some time to come as we have a triple-whammy of the Budget, US election and the Bank of England rate decision. The Government don't seem to be trying to help SMEs grow and recruit and this hike will likely be passed on in the form of the cost for goods and services, which is then going to impact inflation, and therefore the Bank of England's interest rate decisions. Coupled with the Workers' Rights Bill, it is an increasingly unattractive prospect to take a chance on any new staff.
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Matthew Knight
Independent Strategist and Freelancing Advocate at Freelancing.Support
This increase is not only set to impact small businesses who employ staff, but also freelancers and the self-employed. Freelancers will be affected - as many are hired "inside IR35" or work effectively as employees via umbrella companies, and those deductions are taken from their day rate, rather than swallowed by the hirer - leading to lower day rates and lower income. Small company directors also pay themselves as an employee, so they will also be affected. This is not just a tax on larger business, this is a tax on 4m+ individuals who are less able to take the hit in challenging economic times.
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Dariusz Karpowicz
Director at Albion Financial Advice
With tax hikes looming and legislation changes on the horizon, companies are halting new hires, fearing they’re shouldering all the risk while being sidelined in policy decisions. Small businesses are the backbone of our economy; they drive employment, fuel innovation and contribute to our communities. Ignoring their needs isn’t just shortsighted, it’s economically unsound. A balanced approach that protects these enterprises through supportive policies is not a luxury but a necessity if we’re serious about sustainable growth.
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Patricia McGirr
Founder at Repossession Rescue Network
This Budget risks turning small businesses into a critically endangered species. We’re the backbone of the economy, yet policy after policy feels like another giant barrier. If the government wants jobs, growth, and innovation, they need to stop viewing small businesses as cash cows and start treating us as partners in prosperity and stability.