Chancellor of the Exchequer Rachel Reeves has conceded that the increase in National Insurance employer contributions from next April will not be “easy” for companies to absorb.
Speaking at a conference in Hull, Reeves said: “I’m not going to pretend that it’s going to be easy for businesses, or indeed for charities or local authorities, to absorb – especially the national insurance increase.
“But we made a commitment during the general election […] that we wouldn’t increase taxes on working people, because over the last few years it has been working people that have had to bear the brunt of tax increases.”
Reeves is facing a major backlash from her Budget announcement – which include increasing employers’ contributions to 15% from April 2025. Many retailers have cautioned the change will have an impact on headcount, stifle recruitment and could lead to higher prices.
However, the chancellor reassured that “we will never have to do a budget like this again”.
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She added: “I have now set the envelope for government spending for the next few years so I’m not going to need to come back and top that up, either with more borrowing or more taxes.
“Now, I can’t write five years’ worth of Budgets in just five months – we don’t know what might happen in the future in terms of shocks to the economy – but I can give businesses the confidence in this budget we have wiped the slate clean, we will never have to do a budget like this again.”
Over 70 retailers including Tesco, Sainsbury’s, Next, Amazon, and Boots wrote to Reeves last month, warning that the “sheer scale” of the new costs on companies meant job cuts were “inevitable”.
They argued that a mix of measures, including boosting employers’ National Insurance, raising the national minimum wage, and new levies on packaging, could raise the sector’s costs by up to £70bn per year.
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