Labour has proved yet again that it hates employers/business.

[Batmanisaplaceinturkey]

Don't be surprised when your local pubs, restaurants, hairdressers etc close up shop.
Don't be surprised if your employer can't fund your next payrise, because their NI bill has increased. Workers will indirectly pay for these increases; employers don't have magic money trees.
I work for an employer that has charitable status. We work to improve the lives of others but now have to look at reducing headcount. Employers are not all fat cats driving Mercs.
BTW, I hate the Tories. This post does not make me a Tory before anyone starts that one.

I own a small business and employ about 30 people. Turnover is just over £1 million annually. We create and pay about £400,000 in tax and duties a year. Our industry was hugely affected by the pandemic lockdowns and the huge increase in utilities.

The reserve of cash the business had prior to the pandemic has been completely depleted and we have £120k of debt instead. We are re-paying the debt and we cannot build back our reserve of cash until we have done that.

About half our employees are young or 'unskilled' (I use that term in the sense that society sees it as an industry that does not require skills). In reality we employ many excellent people with amazing people skills, which is not something that anyone can do. We nurture and train our young employees to give them those skills too. I would love to double the wages of our employees but we would not have any customers as we would be seen as ripping customers off because we would be so expensive compared to similar businesses.

The last few years of above inflation rises in NMW have increased our wage bill hugely. We have not been able to increase our prices to cover this as we have to balance profits against the reality of what customers will pay. This NI increase on top of another big increase on the NMW will cost us another £40k. We have no option but to increase prices or go bust, but we will again need to balance any increase against the risk of losing customers.

We are not making massive profits at the expense of paying our employees. I earn less than several of my employees and have months where I don't pay myself at all.

The business is not a 'bad business', it had traded successfully for over 20 years prior to the pandemic. Our employees are loyal and enjoy working at the company. Many have been with us for over 10 years.

We are not special, this is the reality for many, many small businesses in the UK. The issue is that many small business have been absolutely hammered over the last 5 years and have nothing left to give,

We will do our best to keep going, but I could name dozens of similar businesses to us that have already stopped trading in the last 3 years. Each of them no longer paying the taxes they created into the economy.

How are the NHS and schools etc. going to be funded when the numbers of businesses creating the tax receipts cannot keep doing so?

In this country we have a system where businesses can keep wages low because they will be topped up by the government via UC. I am not clear how the NI increase will improve this.

However

The focus on taxing unearned wealth vs earned is a significant move for the better. They're not going to be able to change things completely in one budget but this is a strong start.

I think this sums up the budget very clearly

Thank you.

I meant to add to my post that businesses are not whinging about the small 1.2 increase in NI, it's that the increase is on top of everything else!

I wish they would wake up and increase the funding

Very much so.
NHS.

They're a bit of trouble aren't they!

Ok so I get why you might be pleased businesses are facing higher taxes as it's not your sector and not your pay but surely you know people employed by them?

And in the end the growth in the private sector impacts the payments in the public sector in a delayed way, we do actually need growth

So the 'my heart bleeds line'.. that's just working people who are being hit that you are feeling good about, which doesn't really stack up

Why is it my responsibility as a taxpayer to subsidise business profit?
Money has to be clawed back from somewhere... its usually public services and public sector workers taking the hit so again... forgive me if I'm not gnashing my teeth about a slightly lower profit margin.
Ohh... thats right.... profit margins probably wont be affected because their employees will eventually take the hit.
My heart is still bleeding....

So, the problem isn't the NMW or increase in insurance is it - not a question as I believe anyone working full time should afford the basics. Their necessary or people are put into poverty.

The problem is that the money above that isn't working. A struggle between the middle and mild upper class is now playing out. And both sides are wrong as it's the proper rich who gets everything

Reeves has openly said that she expects the NI changes will mean wages will increase less than they otherwise would. That being the case, I don't think they hate businesses - I think they needed a way to take a significant amount of tax from working people without it looking like that's what they were doing.

This way working people will pay (either through lower pay rises or losing their jobs altogether) but Labour can still pretend they haven't broken any manifesto commitments.

@Paganpentacle Do you know who pays your wages? It’s tax from business and everyone who works for them. If the government screws business, there IS less money! There is NO growth. No one is forecasting much growth in the economy. The only growth will be in the state sector paid for by everyone else. I think you do need to understand fiscal realities a bit more. The other option is more government borrowing which screws our DC. I guess you don’t care about that either.

How is the economy going to survive with just the NHS? Interesting question. Given that it's estimated that every £1 spent on it has an approximate corresponding economic benefit of £4.

Similar returns are true for education, £3 return for every £1.

Obviously the realisation of these benefits take more than a parliament to filter through though.

You must know that the NHS is about the fifth largest employer in the world.

Businesses are not being screwed are they?

They pay shite wages, get the taxpayer to make up the difference and reap profit and bonuses.

Well it's either this or a Tory government who likes to spend loads of money they don't have on vanity projects and then blame disabled people for all the UK's problems and suggest stripping away even more of their support.

I know which I'd prefer.

This government is putting up minimum wage. That's a good thing and if employers don't want to pay it they shouldn't employ people. Nobody can survive due to all the inflated food costs.

10/10 this.

Businesses are not being screwed are they?

They pay shite wages, get the taxpayer to make up the difference and reap profit and bonuses.

Exactly. For years, people have been moaning about a welfare state that has to top up people's wages because they're working their fingers to the bone for a pittance. Only way to solve that is by raising minimum wage.

I'm not sure you quite understand where revenue comes from or how the public sector is funded. Technically the Bank of England funds government spending, the revenue raised from all sources goes to pay down the previous year's borrowing.
The return to the economy should more than pay for the investment over time.

Public Services, despite what we're told, are cheaper & at least as efficient & productive as their private counterparts, we'd still need to pay for these services but that money would be going into private hands along with any profits.

discovery.ucl.ac.uk/id/eprint/10131076/1/RWER84-Hall-Nguyen-PROOFS.pdf

I currently work for a non profit organisation who will be closing its doors in the next 18 months because they cannot afford to carry on. Not all businesses are making £££s in profit, most small businesses are just floating above water if that. Its these type of businesses who will fold, leaving the bigger organisations to carry on, and they'll just raise prices on products to make up the shortfall. There are no winners here other than big organisations/corporations who can manipulate the market.

What are you saying here? Do you too believe we don't need cafes, hairdressers and pubs?

Wasn't the economy under labour amazing from 1997 to 2007? And the GFC wasn't their fault

It depends how you define need I suppose. I've got 6 pubs and 3 hairdressers within a 15 min walk, if it's a choice between fewer pubs & hairdressers & services being funded I'd choose the latter. Especially as the later are of greater social & economic benefit.

Not that I think this budget is going to either decimate businesses or fund services properly. It's still austerity economics, there's still cuts being made to government depts' spending, but now businesses are being asked to pay more for it.

For smaller businesses it shouldn't affect them as they have increased the allowance before they pay any national insurance, I think most people missed that part. We need the money!

My local pub is happy, they have reduced the duty on draft beer!

I think you missed the bit where they have also decreased the threshold for when NI becomes payable!

“Significantly, the secondary threshold at which employers start paying National Insurance for a particular employee will decrease. Currently, employers are only liable to pay NI for staff earning more than £9,100per year. From April 2025 this will be reduced to £5,000 meaning that many more low-earning staff will be captured.”