Cannock firm calls for clarity on employer national insurance hike ahead of autumn budget

In her budget statement this week the new Labour chancellor Rachel Reeves is widely expected to announce an increase in the rate of national insurance paid by employers as part of efforts to boost funding for public sector reforms.

Construction firm Inco Contracts employs 40 staff at its Cannock headquarters and in satellite offices around the country, but Senior Contracts Manager Tim Lewis fears increased government tax burdens may prevent smaller firms from taking on additional staff and leader to higher cost inflation in the industry.

"The proposed increase in employers’ NI contribution will ultimately result in higher prices for consumers and this, in turn, increases the cost of products and services pushing inflation higher, a vicious circle you could say," he said.

"The bigger industry picture is equally worrying. We are a national construction company employing 40 people and also tap into a supply chain of over 150 businesses, ranging from very small limited companies to large internationals.

"We have had no guidance as to how the increase in NI contributions will affect our supply chain going forward. I fear it will put a lot of pressure on smaller firms with many choosing not to invest in plant and equipment or recruit further staff due to the imposed additional costs."

Currently, employers pay National Insurance of 13.8% on a worker's earnings above £175 a week, with the government also expected to lower the threshold at which employers start paying the tax in a move it hopes will raise up to £20billion for public finances.

Earlier this week the British Retail Consortium urged the chancellor to use the budget to continue to keep prices low as rates of inflation hit their lowest levels since 2021, with calls for inflation stability backed by Mr Lewis, who says the Cannock firm would be looking to invest in new staff and offices over the next year.

“The big hope is that the budget brings stability to inflation, which in turn will provide increased confidence for the Bank of England to reduce interest rates," added Mr Lewis.

"The sky-high rates we’ve seen in the last few years have reduced the spending of key pension funds and this has restricted activity across the construction sector as a whole. If we can maintain lower levels, then that should spark an upturn as investment in portfolios increase."