Everyone is saying the same thing about Labour’s employer National Insurance hike

Workers are fearing they will be made redundant under Labour’s plan to raise employer’s National Insurance.

Chancellor Rachel Reeves announced in today’s budget employers will now start paying National Insurance at £5,000, rather than the previous £9,100 threshold.

Experts are now warning many businesses will not be able to afford to keep as many staff, with Martin Lewis warning it’ll cost employers an extra £615 to keep each worker.

And it is expected business owners will have to dip in to profits to afford the new costs.

Simon Gleeson, a partner at Blick Rothenberg, told Metro: ‘Any industries which are already going through a stress test, including pubs and restaurants, will be feeling the impacts of today’s budget.

‘This will limit any further hiring for them, and may even push them to close if there is not enough financial incentive for them to stay open.

‘The budget is pinching into the working person’s pockets and stifling small business growth, and potentially bring forward redundancies.’

The Office for Budget Responsibility (OBR) has said it will be workers who end paying the price of the raising of National Insurance contributions.

OBR member David Miles said: ‘It seems highly likely that it will have an impact on the level of wages that firms who are facing higher taxes on employing people will pay.’

One small business owner Gareth Morgan, who runs marketing agency Balance, said: ‘Businesses are less likely to make a profit, the lucky ones that make a profit now get to keep less of it and the very, very lucky ones who get to sell their business, take home less.

‘It makes small business owners question their sanity.

‘I know people who’ll be less likely to employ based on this and this will certainly be factored into our growth plans based on head count.

‘The government should be doing something to encourage small businesses rather than push them away as small businesses are what helps the overall economy grow.’

The health of workers is also more at risk under the looming threat of redundancy, as well as many losing out on medical benefits.

Julia Turney, Partner and Head of Platform and Benefits, Barnett Waddingham: ‘This might turn out to be a short-sighted move which could have serious implications for employee benefits and public health.

‘Many employers currently use the savings they receive from National Insurance relief to boost pension contributions or fund additional benefits like healthcare and life assurance.

‘If these savings disappear, many employers could make the difficult decision to reduce or cut these benefits altogether.’

People have taken to social media to say they know redundancies are on the way.

One X user wrote: ‘Rachel Reeves has just lost millions of people their jobs. No small or medium sized business can afford this. Redundancies are going to sky rocket.’

Another added: ‘It means that I will have to lose a third of my small team, redundancies are now inevitable for my small business.’

Richard Godman, Tax Partner at Menzies LLP, said: ‘The Chancellor is trying to rebuild Britain by piling on the pressure on businesses with extra taxes and employment costs.

‘This risks destabilising the small and medium-sized firms that are the foundation of the economy.’

But others have praised the budget, saying the government is securing growth by adding pressure on businesses.

TUC general secretary Paul Nowak said: ‘The Chancellor was dealt a terrible hand by the last Conservative government – a toxic legacy of economic chaos, falling living standards and broken public services.

‘But with today’s Budget the Chancellor has acted decisively to deliver an economy that works for working people.

‘The Government’s investment plans are a vital first step towards repairing and rebuilding Britain – securing the stronger growth, higher wages and decent public services that the country desperately needs.’

Minimum wage has also been raised to £12.21 per hour, which is up 6.7% to be £1,400 a year for each full time worker.

Unison’s assistant general secretary Jon Richards said: ‘Rachel Reeves has hit the reset button, erasing the Tory shambles and misery of the past.

‘This authoritative Budget turns the page on the horrible history of the past 14 years. The Conservatives’ toxic combination of austerity, unfunded spending and fake promises to lower taxes left the country in a dreadful state.’

Michelle Ovens CBE, Founder, Small Business Britain said: ‘The employer national insurance rise was offset for small businesses by a significant rise in Employment Allowance.

‘Indeed, only businesses with significant wage bills, over half a million, will see a rise, with many smallest businesses actually getting a tax cut.

‘In the big picture, the Small Business Strategy announced today by the Treasury will be an opportunity to put small businesses at the very heart of Government decision making.’

Get in touch with our news team by emailing us at webnews@metro.co.uk.

For more stories like this, check our news page.