Small and medium-sized firms across Humber say impending tax rises are causing genuine concern and forcing them to rethink strategies.
Hull & Humber Chamber of Commerce says members of its area councils in Hull and East Riding, Goole and North and North East Lincolnshire say the incoming National Insurance contribution rises from April will put strain on their finances when inflation and energy costs are also on the rise. The Chamber says it will be meeting Ministers in the coming weeks to highlight the worries.
The regional sentiments echo the findings of a national survey of 1,200 companies by the British Chambers of Commerce in which 82% said the contributions rise was forcing them to change their plans. That translates to impact on recruitment plans (58%), prices (54%) and investment (36%). Only 18% said the rise is unlikely to cause any change.
David Hooper, Hull & Humber Chamber’s director of external affairs, said: "Businesses across the country are facing huge cost pressures from all sides and our members are telling us these increases are causing real concern. Although we’ve seen a recent cut in interest rates, inflation is rising and only today it was announced the cost cap on energy prices had gone up more than was expected.
"Firms already under pressure are being forced to rethink their future plans, scaling back on training and putting the brakes on recruitment and investment. We are meeting two Government Ministers in the next two weeks in Hull and will be voicing these concerns on behalf of our members directly.”
Nearly 80% of businesses nationally said they do not feel the impacts of policies are being properly assessed, and 77% suggested changes are not moving at the right pace. However, firms were more understanding of the rationale for policies (42%).
Alex Veitch, the director of policy at the British Chambers of Commerce said: "The clock is ticking down to the National Insurance rise, and firms are already telling us they are sitting on a powder keg of costs. Most are saying they will have to raise prices and reconsider recruitment plans. That’s unlikely to create an environment that fosters growth, the key priority for Government. Ministers need to read the room and recognise the impact this tax hike will have.
“The Government has pledged to retain the National Insurance tax position through the life of this Parliament, but our new evidence should give pause for thought. We need the Government to publish a wider tax roadmap for business, setting out the direction of travel for costs like national insurance and business rates.
“Business rate reform must be an urgent priority, creating a system that incentivises investment. Getting on with planning and skills reforms will also remove blockers to growth. Our survey also shows growing concern about aspects of the Government’s employment rights legislation. Some of the proposals are completely disproportionate to the reality of how businesses are operating.
“We welcome recent announcements on infrastructure projects which will help boost local economies and supply chains across the country. The upcoming strategies on industry, infrastructure and trade are also vital to help shape the economy for the long-term. But that’s small comfort for businesses feeling the cost pressure of National Insurance right now. With prices likely to rise and recruitment challenges ahead the outlook remains deeply concerning.”
