Stuart Anderson MP has expressed his "extreme disappointment", as the government presses ahead with its hike on employer's National Insurance Contributions - despite widespread warnings it would punish working people through lower wages and fewer opportunities. It could cost as many as 130,000 jobs, according to Bloomberg Economics.
The intervention was part of the Second Reading of the National Insurance Contributions Bill which Stuart has opposed because it will enshrine into law several negative changes announced in the Chancellor's Budget on 30th October 2024.
It included increasing the rate of National Insurance Contributions (NICs) paid by employers on employees’ earnings from 13.8% to 15%. Meanwhile, the Chancellor also announced she will be lowering the 'secondary threshold' (after which employers start paying NICs on employees’ earnings) from £758 a month to £417.
At the debate, Stuart called on government MPs to do the right thing to protect businesses and working people by voting against this Bill. If they fail to do so, he said, they will once again confirm to the public that the government is a party of broken promises that does not understand how to grow the economy and is not on the side of business.
Since the decision was announced in October, business confidence has dropped to its lowest levels since the pandemic, according to the Institute of Directors (IoD). It jeopardises the government's previous pledge to make Britain the fastest growing nation in the G7 - which has been sidelined in its newly published 'Plan for Change'.
The number of business closures also increased following the Budget. 1,022 businesses, an increase of 64 per cent, closed in the week following the Budget year on year. The Confederation of British Industry (CBI) has added that growth expectations among British companies have taken a ‘decisive turn for the worse’ following Rachel Reeves’ budget.
The Office for Budget Responsibility (OBR) estimate that the tax hikes will cost businesses an additional £800 per employee. Most firms are now expecting economic activity to decline in the first quarter of 2025.
The government had hoped the changes would raise £25.7 billion for public services. Given the expected fall in wage growth, the Office for Budget Responsibility (OBR) estimates that only £16.1 billion will actually be raised.
It comes as the government inherited the fasting growing economy in the G7. In the first half of this year, the UK enjoyed the strongest growth in the G7 group of advanced economies. Growth now languishes at just 0.1 per cent.
Stuart Anderson MP said:
"Businesses in South Shropshire deserved the certainty and stability needed to plan ahead - creating the jobs and opportunities that help communities like ours to flourish. Yet, the government's National Insurance Jobs Tax is already deterring them from recruiting and could force them to push up prices. Costing businesses an extra £800 per employee, these changes will deliver nothing but lower wages and less opportunities for local people across South Shropshire and beyond. That's why my colleagues and I have urged the government's MPs to do the right thing; to protect businesses and working people by voting against this Bill. If they fail to do so, it will confirm that this Budget was one of broken promises and that the government does not understand how to grow the economy nor is it on the side of local businesses."
Speaking in Parliament, Stuart said: “Thank you, Madam Deputy Speaker.
It's a pleasure to speak so high up the list and to follow on from the Honourable Member from Loughborough, who I believe I'll have different views on this job’s tax debate. If we first of all go back to manifesto commitments. This is very important, because as politicians, we go out to the public and tell them what we're going to do. And I heard time and time again: "we will not raise taxes", and you're going to say, on "working people". I will come to the definition on working people shortly.
So, why are we in a debate now discussing National Insurance contributions and how they're going to rise? I have a couple of questions for the Minister if he can, when he winds up, set out. When the Chancellor looked at the figures, looked at the OBR forecast, did she either not spend enough time on them, or did she not understand them? I'll be very keen to understand that.
And also the accession talks, when they went and sat with the Civil Service, they were told everything that was happening. At what stage did they then realise that the figures were completely different? Because they weren't. They were able to see behind the scenes, and the Chancellor's had a full view in which they could go to the British people and tell them they would not be raising taxes. So, here we are today on raising taxes for working people.
So, I met with a group of working people, who I define as working people, in Ludlow; a group of publicans. Almost every publican in Ludlow, they deal in hospitality at the highest level. Ludlow is one of the fine food capitals of the UK. And I'd invite many members to come and see this great quality. And I sat with these members of this hospitality industry. Some of them had been in it for a few years. Many of them been in it for a decade, two decades. They knew the trade in South Shropshire. They know hospitality exceptionally well. They have worked year on year and created a great reputation in what they do. They are at this stage where their turnover is the same, their footfall is roughly the same, but they cannot see as of next April, how they can make a profit. So, we can argue backwards and forwards of what we think. I am listening to my constituents who unanimously, in a town, or almost unanimously, agree that they cannot see a way forward when this budget comes into play next year. They can't.”
Intervention: Thank you, for giving way. Under the last Conservative government, 10 pubs closed every single week before he talks about our record, will he apologise for the record of the last Conservative government, which was incredibly damaging to businesses, particularly our hospitality businesses right across the country?
Stuart Anderson MP said: "I thank the intervention. I'm pretty sure the Chancellor's just gone; hold my beer, I'll make that 20 a week with the latest.
Listening to my constituents, they are really struggling with this. They cannot see a way ahead, and they are pleading for me to lobby the government and say: "this doesn't work". These are people that know this inside out. They are not massive businesses. A lot of them employ more than four people. So they are not the broadest shoulders. They have worked for many years to make this work. And this isn't just in Ludlow, it's across my constituency. We have Small Business Saturday coming up, and I'm speaking to business after business that are finding this impossible to see a way forward next year.
Intervention: He is talking about small businesses. And last week, I was very proud to host the Federation for Small Businesses here in Parliament. They have welcomed the Budget, in particular because of in particular because of the increase to the employment allowance - which will see the smallest businesses benefit. 250,000 of the smallest businesses better off now than before the budget. Are they wrong?
Stuart Anderson MP: I am pretty sure the Federation of Small businesses are not welcomed a National Insurance rise on small businesses. I will be happy to go and have a look at that. But I am convinced no small business is enjoying a National Insurance rise on employers contribution.
So, these are working people who joked with me, but actually there's a seriousness behind the joke. So they work, they employ 10 people. They get up early hours and work late in the day to make that make a profit. They cannot see a way to make a profit. Now it is rumoured that on Thursday, we have another reset from the government, where they have binned growth. There is no possible way we are going to see growth in this country based on this budget.
And actually businesses hope. The views that they have and the hope that they had to see growth, they are now looking at how they survive. This is a survival budget. Can businesses get through? They are hoping that there is going to be a change to this. They're hoping that the Chancellor sees sense and they can turn this around, because this does not work for any of the businesses across South Shropshire.
And I ask you, I am sure, as the Honourable Member has mentioned, he thought he might be an anomaly. Maybe I am an anomaly in South Shropshire. But local businesses are not getting this. I urge the Chancellor to go away, look at this and have a think. And I have a question for the Minister for winding up, does the Minister believe the Chancellor will still be in her position when this comes into play if it's voted through tonight?
