National Insurance hike backfires as UK business stop ‘investing in the future’ over costs

National Insurance hike: Expert discusses effect on businesses

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The rise in National Insurance is threatening UK economic growth as businesses are forced to slow recruitment and reduce production levels. Director-General for the British Chambers of Commerce, Shevaun Haviland has called upon Rishi Sunak to make urgent changes to support businesses and ensure they are able to continue to operate following the recent surge in energy costs and national insurance rise.  Without essential government support, Ms Haviland claims businesses “will have to stop recruiting, they will have to pull back on production and they will stop investing in the future.” The turn of the year saw signs of economic growth returning to the UK, but the 1.25 percent increase in national insurance for both employees and employers threatens to stifle this increase.

“We were beginning to see growth again as the year came in,” claimed Ms Haviland. 

Expert in supporting growing businesses, Ms Haviland argued it is essential that the Chancellor puts in place a support package for British employers.

LBC host Andrew Pierce highlighted that the rise in national insurance comes at a time when the tax burden in the UK reaches its highest point in 70 years.

The National Insurance increase has been introduced by “a Conservative Government that went into the last election pledging not to raise national insurance, not to raise income tax or VAT,” he continued.

Ms Haviland remained sympathetic to the Tory leadership and argued that the Government “couldn’t have foreseen” the global rise in energy prices that sparked the recent price cap increase now also affecting British business.

However, she was quick to highlight that the Conservatives still “have other levers” at their disposal to support the nation as the cost of living continues to rise.

Haviland argued that the increase in national insurance will impact small and medium enterprises the worst as they struggle to cope with the hike in energy prices. 

She demanded the Chancellor “look at a temporary price cap on energy for SMEs to help them get back on their feet.”

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The Director-General urged the Chancellor to act hastily to prevent a drop in economic growth just as the UK was starting to show “the green shoots of recovery.”

Haviland demanded that the Chancellor not “wait until October for the next budget,” instead Rishi Sunak should “act before then” to save British businesses.

The 1.25 percent increase in national insurance contributions comes into force from April 6 following the increase in the energy price cap at the beginning of the month.

The increase was announced in September 2021, breaking the Tory 2019 manifesto promise that the party would “not raise the rate of income tax, VAT or National Insurance,” if they came to power.

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Ms Halivand represents the British Chamber of Commerce, a business group aimed at supporting businesses of every size and sector in the UK and around the world.

She explained that, as a chamber network, the British Chamber of Commerce works with nearly 100,000 businesses across the UK.

Ms Haviland remained confident that the Chancellor would appease her demands for greater SME support.

She claimed the Government “listen to our businesses” and speculated that the Chancellor would take action imminently.

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