The Government’s decision to increase Employer National Insurance Contributions (NICs) is causing widespread discontent across the Borough and beyond.
Recent reports from the Financial Times reveal troubling trends: business activity is shrinking, the pound is weakening against the dollar, and business and investor confidence is declining.
Adding to the chorus of criticism, the Confederation of British Industry (CBI) has warned that the NICs hike is forcing businesses to scale back on growth plans. Local employers have voiced their plans to freeze new hire schemes, describing the NICs rise as a poorly thought-out move with dire implications for economic growth.
The impact of the NICs increase is not limited to the private sector, it has a knock-on effect for the public sector too. In a letter to the Chancellor, I highlighted how organisations providing critical NHS services are also being affected. These essential providers now face a 1.2% increase in employer NICs, alongside a lowering of the earnings threshold for contributions – from £9,100 to just £5,000 per year. This decision creates a baffling contradiction: the Treasury appears to give financial support to the NHS with one hand, while taking it away with the other.
NICs increase will cost an additional £865 per year for every employee earning £30,000. For GP surgeries, this translates to thousands of pounds in extra expenses, diverting funds that could otherwise have been used to hire much-needed staff. The burden doesn’t stop there – hospices, care homes, dentists, pharmacies, and other vital healthcare providers will also struggle to absorb these rising costs.
Another concern for my constituents is the effect on household budgets, particularly through higher food prices. There is a significant risk that supermarkets will pass on these increased costs to consumers, making the weekly shop more expensive.
Farmers, too, are facing a double blow – not only from changes to Agricultural Property Relief (APR) but also from the NICs increase. Together, these Labour policies are a recipe for higher cost of food production and, ultimately, prices on supermarket shelves.
The surge of frustration by constituents as Labour renege on election promises is not surprising. This Labour Government elected just six months ago, on a platform of frivolous promises, has instead delivered a litany of reversals, both undermining its credibility, and leaving the British public wondering whether this Government can be trusted.
As the Member of Parliament for Solihull West and Shirley, I urge the Government to halt, reconsider, and recalibrate its approach. A Government cannot always make the right decisions, but it is up to them to admit when they have got it wrong and not charge forward out of dogmatic idealism. These NICs increases, alongside other missteps, are harming businesses, healthcare providers, and families across the country. It is time to prioritise the best interests of the United Kingdom and its people, before the damage becomes irreversible.
