October 30th 2024.
Rachel Reeves, the Chancellor, made a big announcement in today's budget that has caused quite a stir among workers. Many are worried about losing their jobs due to the Labour party's plan to increase employer's National Insurance. This change means that businesses will now have to start paying National Insurance at a lower threshold of £5,000 instead of the previous £9,100. Experts are warning that this could lead to businesses being unable to afford to keep as many employees, with Martin Lewis estimating an extra cost of £615 per worker for employers.
As a result, businesses are expected to dip into their profits in order to cover these new expenses. Simon Gleeson, a partner at Blick Rothenberg, expressed concern for industries that are already struggling, such as pubs and restaurants. He believes that this change in the budget will limit their ability to hire new employees and may even force some businesses to close if they are not financially incentivized to stay open. He also fears that this budget is putting a strain on workers' pockets and hindering the growth of small businesses, potentially leading to more redundancies.
Gareth Morgan, a small business owner who runs a marketing agency called Balance, shared his thoughts on the budget as well. He believes that this change will make it more difficult for businesses to make a profit and will ultimately lead to less money for small business owners. He also worries that this could discourage businesses from hiring new employees and may impact their future growth plans. Morgan believes that the government should be doing more to support small businesses rather than pushing them away, as they play a crucial role in the overall growth of the economy.
In addition to the changes in National Insurance, the minimum wage has also been increased to £12.21 per hour, a 6.7% increase that equals an extra £1,400 a year for full-time workers. However, this news is overshadowed by the looming threat of redundancies, which not only affects workers' financial stability but also their access to medical benefits. Julia Turney, Partner and Head of Platform and Benefits at Barnett Waddingham, believes that this budget decision may have serious implications for employee benefits and public health. She points out that many employers use the savings from National Insurance relief to provide additional benefits such as healthcare and life assurance, and without these savings, businesses may have to cut or reduce these benefits.
The impact of this budget has been felt on social media, with many expressing their concerns about the potential for redundancies. One user wrote that millions of people may lose their jobs due to this decision, as small and medium-sized businesses cannot afford these new costs. Another shared that they will likely have to let go of a third of their small team, making redundancies inevitable for their business. The effects of this budget are yet to be seen, but it is clear that many workers and businesses are worried about the future.
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