UK Businesses Express Concerns Over Rising Employment Costs Ahead of Budget

Businesses in Devon are holding back on hiring new staff and urging the government to reduce employment costs in the upcoming Budget. Owners cited rising wages and National Insurance contributions as primary concerns impacting their ability to expand and invest.

Michelle Bunker of WGP Maintenance expressed a clear desire for a decrease in National Insurance contributions. Tim Randell, who runs Links Publishing, stated that recent government policies, including increases to the National Living Wage and National Insurance, have discouraged him from filling two open positions. "All we've had for the last two Budgets is more tax, more expense, the living wage, and all those things mean that people like me are not employing the young," Randell said. "I have two positions that I could fill, want to fill, want to expand and grow my business, but I'm holding back because of the employment costs."

The context provided by the source indicates that National Insurance contributions were set to increase for companies. In the 2024 Budget, National Insurance for salaries above £5,000 was announced to rise to 15% from April 2025, up from 13.8% on salaries above £9,100. Additionally, the legal minimum wage for those over 21 increased from £11.44 to £12.21 per hour in April 2025.

Kevin Miller, boss of Apex HR, emphasized the critical role of small businesses, calling them "the backbone of the whole economy." He requested tax relief to lower the cost of employing people, stating, "We need to reduce the cost of employing people because we're all passionate about really wanting to build this economy and grow it - so help us out with some tax relief please..."

Charities are also feeling the strain of the cost of living crisis. Elsbeth Hallam from Hugs Children's Cancer Charity noted that individuals are spending less, which directly impacts the charity's fundraising and its capacity to support families.

The hospitality sector, a significant employer in Devon, is also facing challenges. Melanie Williams, events manager at the Duke of Cornwall Hotel, suggested revisiting Value Added Tax (VAT) for the sector. Pete Adams, general manager at the Moxy Hotel, echoed this, suggesting a reduction in VAT from 20% to 10% could allow businesses to lower prices for customers, potentially increasing footfall and overall spending.

During the Devon Business Show, hosted by the Devon Chamber of Commerce, Helen Wylde-Archibald, CEO of the Chamber, highlighted that local businesses are "planning for a better future" and need a "soft touch" from the government to facilitate growth.

A spokesperson for HM Treasury stated that the government is committed to supporting businesses through measures like business rates cuts, a cap on corporation tax, and relief on employer National Insurance contributions for younger hires and apprentices. The spokesperson added that decisions on tax are for the chancellor to announce at fiscal events.