Rise in national insurance to hit jobs and investment, high street bosses warn

High street jobs and investment plans are at risk because of the hike in national insurance payments, retail and hospitality bosses have warned.

It comes as the rate of employer NICs (national insurance contributions) increases from 13.8% to 15% on Sunday April 6.

At the same time, firms will also pay more because the Government lowered the salary threshold at which companies start paying NICs from £9,100 to £5,000.

UK retailers have warned that hiring plans, particularly for part-time workers, will be held back as a result.

‘Trimming’

Meanwhile, the boss of one of the UK’s largest pub groups said he was “trimming” some investment plans to deal with the surge in costs.

The fresh tax increase comes days after businesses were hit by a 6.7% increase in the national minimum wage.

Many high street firms have also faced higher costs from an increase in business rates due to a reduction in current discounts for more than 250,000 retail, hospitality and leisure firms.

The British Retail Consortium (BRC) said changes to NICs and wages will cost retailers another £5 billion over the next year.

It said it will cost shops 10% more to employ workers due to the changes, and 13% higher for part-time staff.

Reduce hours

Helen Dickinson, chief executive of the BRC, said: “A recent survey of retail finance directors showed that half were planning to reduce hours and workers as a direct result of the employer NIC hike.

“It will be part-time jobs which take the biggest hit.

“Part-time retail jobs hit their lowest level since records began in 1996, and have fallen by 200,000 in the last seven years.

“While the Government’s welfare reforms aim to increase the numbers in work, this week’s cost increases will kick away the ladder for many who are just getting their first foothold.”

Meanwhile, the chief executive of pub giant Greene King said its investment plans would be impacted as a result of swallowing larger-than-expected costs following the October budget.

Nick Mackenzie told the PA news agency: “Everyone in the industry is facing a barrage of costs that are hitting them at the same time, with the minimum wage rise, NICs, business rates.

“We are still investing heavily but there are areas where we have trimmed our investment plans because we have to be sensible about managing these costs.”