Redundancies and a freeze on pay rises, investment and recruitment are all on the cards for Somerset businesses as a direct result of the Government’s decision to increase employers’ National Insurance contributions.
In a survey conducted by Somerset Chamber of Commerce, 96% of respondents said they were either somewhat or very concerned by the increase, which is due to take effect in April.
Some 61% said they would reduce or stop recruitment, 72% said it would impact cashflow, 58% said they would be unable to give pay rises to staff and 51% were worried they may have to make redundancies or keep posts vacant.
Somerset Chamber will use the findings of the survey to lobby central Government in partnership with other South West Chambers through the British Chambers of Commerce. 
David Crew, Managing Director of Somerset Chamber, said: “It is clear from the evidence that increasing employers’ National Insurance contributions from 13.8% to 15% is going to have a significant negative impact on our business community.
“Many will be forced to pass on the additional costs to customers, others are already planning to scale back operations to save money.
“Businesses completely understand that taxation and investment in public services is vital. But the view of many we talk to is that the Chancellor’s last Budget was just a blunt taxation tool that has been inflicted on employers in what is already a challenging economic climate.”
Keith Sinclair, Chief Executive Office of Bridgwater-based charity Brainwave, which supports children with disabilities, said the changes would add £6,000 a month to the charity’s costs – £70,000 a year.
He said the impact would be felt across the board: “We are a charity that generates all our income through fundraising and our charity shops. Like for-profit businesses, we face immense financial pressures—if not more—yet we lack the ability to pass these rising costs on.
“Charities like ours are filling the gaps left by an overstretched and underfunded health, social care, and education system, yet instead of being supported, we are being penalised for our efforts.
“To cover these additional costs, we must either raise an extra £70,000 a year in unrestricted income—an enormous challenge in today’s economic climate—or make significant cuts.
“It is incomprehensible that the Government refuses to consider concessions for the charity sector.”
The impact of the increase is likely to be particularly felt by smaller businesses. Lizzie Tottle, Director and Founder of brand growth agency Teapot Creative near Hambridge, said the National Insurance changes would have a negative impact on investment and cashflow and add an additional cost to the business of almost £1,000 a month.
She said: “This is yet another significant barrier to owning a business. It seems to get harder every year with more and more burden enforced by the Government, with little reward or incentive to grow business or employ more people.”
And the intention of so many businesses to potentially freeze recruitment is a real worry for those working in the recruitment sector.
Dr Shelley Poole, Founder of Wellington HR, said: “I am concerned not just about the direct impacts on our wage bill, but the potential wider slowing of the economy resulting from lack of recruitment and investment.
“We are HR Consultants and have seen some clients are cutting back on recruitment as a result of this. This in turn affects the work we do, and so our turnover may be impacted as well as our wage bill.”
As well as increasing employers’ contributions, the Chancellor also announced that employers would start paying National Insurance on more of an employee’s earnings with the threshold reducing from £9,100 to £5,000. The employment allowance will go up from £5,000 to £10,500.
Mr Crew thanked everyone who had taken the time to complete the survey and added: “It is so important that we have these replies so we can talk about this issue with the utmost authority, credibility and influence.”
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