The NI changes are going to cost my organisation £1000 per employee

[flashbac]

The NI changes are going to cost my organisation on average £1000 per employee, The lowering of the threshold alone is going to cost around £600 extra per employee.

We are heavily regulated with fixed income. We're a not for profit. Our customers expectations are increasing. We are now most likely going to have to somehow reduce our headcount now, and payrises for April are going to be off the table.

Just shaking my head really. Our employees don't deserve this. Hard to see how this isn't a tax on jobs.

The lowering of the threshold also means employers have to pay for more workers, because part time salaries are now dragged into it.

A lot of people reading this won't care. All I can say is this NI increase will also affect you. just think about Local authorities, childcare providers and other services. Do you think it won't affect your Councils services/tax bills, to give one example?

(I'm not a Tory bot btw, before anyone starts accusing me of being one. I voted Remain, don't support the Tories at all, can't stand Boris and his cronies.)

Hunt cut NI by 4%, Reeves has to find that money from somewhere.

The public sector increases have to be funded too, these are pay rises, recommended by indie review bodies and NMW rises too... Hunt set aside nothing for any of this...

So what you want is to roll back business NI increases, not have public sector increases for nurses, teachers and armed forces BUT still have employee NI cuts....

Funded how exactly??

As for Labour crashing the economy, Truss caused that and we are still paying for it with a tripling of public sector borrowing costs.

It’s glaringly obvious.

It would have been impossible for them not to realise, so I think the conclusion here is that they simply don’t care.

There are many, many ways to raise funds. Tax increases for a start, budget cuts in some areas, wholesale reforms. These choices are hard. I certainly wouldn’t have awarded some of the public sector pay increases. This was a political choice. Day 1 employment rights is another. Neither are good for the employment market, employers or employees. Both will shrink the economy. You’re essentially robbing Peter to pay Paul.

Not as long as parties are dependent on donors for their funding.

It would be much better if they were funded by taxpayers then they wouldn't have to appease their union paymasters in the case of Labour and big business in the case of the Tories.

Unfortunately, it looks like Reform are going to have to appease Musk for the same reason.

I'm not sure that increasing the cost of labour is fundamentally a bad thing in the long run. The UK has been a low productivity economy for far too long, and the usual British management style is to throw more minimum wage minimum skill bodies at any problem. UK business investment lagged behind others even before Brexit and has been stagnant ever since.

Perhaps increasing employment costs can tip the balance in favour of greater investment. The employers hit the hardest by the changes to NI and NLW are those that pay the least. The better you pay your staff, the less impact the changes have.

Course there is. This is so naive. Just behave reasonably? In order to run a ‘fair’ (as defined by employment law) process it takes time, resource, and often external advice. Most OMB’s/smaller SME’s don’t have HR teams and in house legal resource. Nor the time required.
Even the most robust recruitment process will not be 100% successful from a retention perspective, particularly when hiring graduate/un proven staff.
In the real world the two year provision protected both parties and removes the barrier to recruit.

Im not taking about unfair dismissal- protected characteristics already infer day 1 rights.

Tax rises on whom?
Budget cuts where?

Reforms cost money.... where does this come from?

We cannot borrow anymore, thanks to Truss.

We have huge issues of recruitment and retention in NHS, Education and Military, so you wouldn't award them a pay rise... so we will have less staff/military and more strikes, which are not great for the economy.

btw the train drivers cost the Govt £247m to settle a strike that cost the country billions in lost productivity and which only gave them an avg of 5% per year, inc one year when inflation was 11%.

It’s not entirely true that Truss is entirely to blame for the current cost of borrowing. Under Sunak borrowing costs, and the markets future view of interest rates, were steadily falling. Since the election the Government talking down the economy and, most damaging, the budget interest rates have not fallen, inflation has risen and growth has plummeted. The rating of government debt has slid back, and is now worse than after the Truss debacle.

At one level, all the good work on the economy done by Sunak and his government has been thrown away. Interestingly, not that much less disruption has followed the ‘settling’ of the train drivers dispute, because many disruptions and delays are the result of the already nationalised National Rail. I’m sure much good work is going on behind the scenes, but this government is truly terrible at articulating a coherent plan.

For example, hospitality, retail and care are some of the sectors hit the hardest by the foolish employers NI rises. All these sectors operate on a high volume, low margin model because labour is such a high proportion of the cost and they are hard to automate. All those saying that employers will just have to manage, or don’t have a sustainable business if they can’t absorb a 20% increase in NI with consequence, just highlight their lack of understanding of how the economy works. Why they didn’t raise the £22 billion for their ideological commitments by raising employers NI on those paid more than £50k, and then again £125k (to reflect the higher and additional rate income tax bands) I do not know. They’d have at least then been consistent with their ‘those with the broadest shoulders’ mantra. And at the same time got more money from the multinationals, financial and professional services and tech companies that people believe are under taxed. I mean, I’m neither a politician or an economist, but I can come up with policies that are more aligned to their ideology than they can!!

Totally agree. We have moved on a number of people and even when it’s been straightforward, it’s time consuming. But there is absolutely nothing stopping employees from making a claim, however spurious or vexatious and tying employers up in costly litigation for months on end.

The payoff to the rail unions hasn't cured the train problem though. Up here in Northern land (which has been govt controlled for a few years, so effectively nationalised), Sunday services are still dire due to cancellations arising from staff shortages. Including obligatory Sunday rota working should have been front and central to the negotiations - but as usual, the Govt just caved in and all the extra costs borne by the taxpayer have no sign of improving the dire train service.

A bit like Blair 20 years ago claiming the stupidly attractive GP contract would "cure the GP crisis". In reality, because of the pay rise, the GPs could work fewer hours and still get paid the same. And they did!

Just caving in and paying higher wages isn't the answer to the public sector inefficiency that's stifling the country in so many ways. We desperately need reform.

See one example, not the same charity as in my previous post:

https://www.localgovernmentlawyer.co.uk/adult-social-care/391-adult-care-news/52330-charity-takes-steps-to-evict-disabled-residents-over-inadequate-funding-by-councils-report

Your post sounds incredibly naive.

Fuckin hell, you think a pay rise instantly gets skilled staff?

On Govt borrowing costs... pre Truss they were 1.8%, they then went to 4.3%, this wrecked Bond values and hence DC pensions, increased mortgage costs too as well as increasing Govt borrowing rates..

Borrowing costs are now similar to that in August 2023, at 4.6%, they fell to 3.8% in Dec 2023 and 4.5% in July 2024 have been up and down ever since, 4.1% in Dec 2024, now 4.6 again...

Totally incorrect to say they fell under Sunak, people shouldn't post inaccurate information to suit their own agenda's.

The main reason, now, gilt yields (Govt borrowing costs) are high is the fact that inflation across the G7 isn't predicted to fall as it once was, interest rates staying higher for longer.

@taxguru On GPs etc, the Tories had 14 years to revise the GP and Dental contracts and did nothing, Cameron said he would hire an additional 5000 GPs, actually hiring no extra at all.

Brexit encouraged many GPs and Dentists to leave the UK, hence things have got far worse in the last 3 or 4 years.

Who gave us Brexit? clue: wasn't Blair or Labour.

I never understood why the Government had to get involved and pay off train drivers ? Aren’t most train drivers working for private operators?
These private companies want to run the fucking railway routes for lots of money ( that’s goes as dividends to share holders) so why is it down to us tax payers to pay them off ?
Isnt this reward for failure? The rail companies can’t settle disputes so want the government to bail them out.. this is what’s working with this bloody country!

The CEO of our charity has also said this will be unsustainable and there will likely be redundancies and cuts to services. We already survive on ridiculously low staffing levels.

Its £135m, according to the treasury, govt uk subsidy to the train operators is around £5 billion.

£135m wouldn't run the NHS for a day, its an irrelevance, in terms of costs to the tax payer.

My employers are facing closing, they're a not for profit organisation. In a meeting we were told that the new NI rules will cost them an extra £300,000. They can't sustain it, it's so sad.

If i saw a move to real change I would swallow a tax rise (as a high rate tax payer). There is certainly an argument to say the lower rate needs to increase.
NHS spending is unsustainable. There desperately needs reform, possibly a new model. The waste within the public sector generally is eye watering. We get told “there’s no money for reform”. Excellent, so we all keep filling a leaky bucket?

As mentioned by someone else the train driver pay off was utterly wrong. A pay rise in exchange for no change to working methods and no increase in productivity. The trains need reform and modernisation. We need an efficient system. I use the trains regularly and they are worse now than ever. I’m always staggered that I walk off my (delayed train through driver/train unavailability) to several people checking tickets?!? Just create E gates. But the unions balk at any change that results in job cuts. The system, therefore, remains broken.

The problem with the UK is we don’t actually produce anything anymore. Most profitable industries have closed down or moved abroad. We have a skills shortage that I imagine will get worse.

The public sector is too big- obviously I’m not talking about police officers or nurses, I mean pen pushers who don’t actually produce anything. The public sector is payed for by tax payers , again a large amount of people to pay.

Lots of people work in low skilled jobs such as retail , near enough on minimum wage again don’t actually produce anything but provide a valuable service.

On top of that , an aging population and millions of economically inactive people of working age.

Many young people don’t want to go into caring or do hard jobs, I honestly think the UK is doomed long term.

To settle the drivers dispute, it cost £135m, a tiny amount.

I don't agree with the waste in the NHS, my DD works in it and what she sees is ever increasing demand, younger and younger stroke patients, the obese, the elderly, its endless, more and more patients get less and less on going care, sent home too soon, because of no space, re admitted with worse complications, often falls.

Kings fund says the NHS is one of the most efficient health services in the world but its under funded for our chronically sick nation, so has poor outcomes.

Reform is all very well but meanwhile the service still needs to treat patients.

Reform is just a word bandied about, without any realisation of the impacts and costs or is used when people cannot think of anything else to say/add.

Many young people don’t want to go into caring or do hard jobs, I honestly think the UK is doomed long term

Why would anyone actively want to go into care work? its a min wage job with no prospects.

Up the pay, create an advancement structure ie team leaders, specialist training, such as physio and ot, drug administration, give company vehicles and watch people queue up to work in the sector.

But no one will pay the taxes to enable this...

In surveys, care comes out as one of the most satisfying jobs ot there!!

Can’t comment on NHS but this is exactly what’s happening in universities. The tuition fee rise has been more than taken up by NI increase. Plus anywhere with a medical school also has to pay for the NHS pay rises!

A few of the train operating companies have already been taken over by the government, so are already effectively nationalised.

Nail on the head. Absolute folly to think we can have a successful economy on the back of "services" and neglect manufacturing and exploiting our natural resources. Sounds good in theory but very dangerous and unsustainable in practice, hence where we are after a few decades of that approach, relying on other countries for our power, food, household appliances, cars, etc etc. Even solar panels and wind turbines and trains are made abroad and shipped into the UK.