Robber Reeves mantra: "Boosting Growth"

GrannyGravy13

I was hoping for something to boost growth and the economy, as that was the Labour Party’s main sound bite during the run up to the election.

As an owner of a SME unfortunately we have seen nothing, zero, nada which will encourage growth.

75% of our business is with the building industry, and judging from our customers, suppliers and other companies in the same field they are not filled with any hope.

Anyone who thinks that this government can build 1.5 million new homes along with infrastructure projects by the end of this parliament, sorry it’s not going to happen.

We have nowhere near the skilled workers or even labourers to fill the positions needed, it takes years to train a plumber, electrician or the many skilled workers needed.

The only way this could get off the ground will be for the government to import labour from abroad…

It's odd because this Government is claiming that there has been a stagnation in house building over the last ten years but, wherever we have been, new estates were springing up everywhere on the edges of towns and villages.

The number of new homes built started increasing in 2012, with a lower amount during Covid but over one and three quarter million homes were built over ten years to the end of 2023.

As you say, we are not training the skilled workers we need.

It's not about disbelieving that the bakery has closed, but about looking more dispassionately at why, and not blaming NI for something that could equally have been caused by the cost of raw materials or energy.

The final nail in the coffin perhaps.

As it will be for many small businesses and, indeed, charities.

What does RR think she is doing by these moves that will stimulate the economy?

I have said this before but NIC is accounted for differently to general taxation in that the NIC collected by HMRC is ringfenced for two things. Part is allocated to the NHS (33 billion in 2023/24) and the rest is used to pay for contributory benefits, 95% of which is the state pension.

www.gov.uk/government/publications/national-insurance-fund-accounts/great-britain-national-insurance-fund-account-for-the-year-ended-31-march-2024

There is more than enough surplus in the National Insurance Fund to cover the rising cost of the SP for another two decades, so any rise in employers NIC must be earmarked for a bigger allocation of funds to the NHS.

In her autumn statement, Reeves announced: I am providing a £22.6bn increase in the day to-day health budget and a £3.1 bn increase in the capital budget over this year and next year.

www.gov.uk/government/speeches/autumn-budget-2024-speech

The changes to employer NICs announced in the Budget are forecast to raise between £23.8 billion and £25.7 billion a year.

commonslibrary.parliament.uk/research-briefings/cbp-10189/

The two tally.

Surely this is a good thing. People off work on statutory sick pay waiting in lengthy queues for NHS treatment don’t contribute to business growth. Getting them well sooner so they can get back to work will.

I was referring to the words “totally made up ‘example’”.

Barleyfields

It seems you are accusing OhOhOh of having fabricated her story Maizie. Rather unpleasant.

I’m not sure she’s accusing ohohoh of making the story up, I too agree it would be very unpleasant, however I agree with Doodledog that perhaps there are factors other than the rise in NI, which hasn’t actually taken effect as yet.

Barleyfields

It seems you are accusing OhOhOh of having fabricated her story Maizie. Rather unpleasant.

I think Maisie is saying that an increase in costs of around £10 a day is unlikely to close a business that is anything other than really struggling.

Also, Ohohoh says that raw materials, rent and energy costs have had an impact too, but the Chancellor can't do anything about that. I'd like to see the government impose rent caps, but that's a different conversation. Brexit has made a difference to a lot of costings, and there's nothing she can do about that, either.

It's not about disbelieving that the bakery has closed, but about looking more dispassionately at why, and not blaming NI for something that could equally have been caused by the cost of raw materials or energy.

OhOhOh

Local bakery shop; owner is the baker and she employed 2 full time assistants. Due to ever increasing costs of raw materials, rent, energy costs and increase in NI contributions for her staff, she had to increase her prices to customers. As a consequence, she sold less and profits went down whilst overheads went up.. She reduced the hours her staff worked, resulting in them both becoming eligible to claim Working Tax Credit. It also meant that after many hours baking bread, pies and cakes, she had to stay after the shop closed to clean the shop, stock take and place orders with suppliers; a job her staff had previously done. She's absolutely exhausted from working from 05.00 to 18.00, 6 days a week but she can't afford to pay their increased NI contributions and contributions to their pensions on top of all the other increases and says that it was the final death by the thousandth cut.. The shop will close for the last time on Saturday afternoon. Her 2 members of staff will be unemployed and intend to claim any benefits they can. The shop, along with several others, will stand empty and so no business rate taxes will be paid to the local council which is verging on the brink of bankruptcy. Boosting growth? 🤔

Whilst it is awful if any small business has to close, always sad and we need small independent businesses, this particular story simply cannot be attributed to the rise in employer NI, it doesn’t come in til April 6th!

Also From 6 April 2025, employers will face a 1.2% rise in National Insurance contributions, alongside a lower NICs threshold. However, an increased Employment Allowance aims to ease the burden for small businesses, rising from £5,000 to £10,000

OhOhOh

Local bakery shop; owner is the baker and she employed 2 full time assistants. Due to ever increasing costs of raw materials, rent, energy costs and increase in NI contributions for her staff, she had to increase her prices to customers. As a consequence, she sold less and profits went down whilst overheads went up.. She reduced the hours her staff worked, resulting in them both becoming eligible to claim Working Tax Credit. It also meant that after many hours baking bread, pies and cakes, she had to stay after the shop closed to clean the shop, stock take and place orders with suppliers; a job her staff had previously done. She's absolutely exhausted from working from 05.00 to 18.00, 6 days a week but she can't afford to pay their increased NI contributions and contributions to their pensions on top of all the other increases and says that it was the final death by the thousandth cut.. The shop will close for the last time on Saturday afternoon. Her 2 members of staff will be unemployed and intend to claim any benefits they can. The shop, along with several others, will stand empty and so no business rate taxes will be paid to the local council which is verging on the brink of bankruptcy. Boosting growth? 🤔

Awful!

I was hoping for something to boost growth and the economy, as that was the Labour Party’s main sound bite during the run up to the election.

As an owner of a SME unfortunately we have seen nothing, zero, nada which will encourage growth.

75% of our business is with the building industry, and judging from our customers, suppliers and other companies in the same field they are not filled with any hope.

Anyone who thinks that this government can build 1.5 million new homes along with infrastructure projects by the end of this parliament, sorry it’s not going to happen.

We have nowhere near the skilled workers or even labourers to fill the positions needed, it takes years to train a plumber, electrician or the many skilled workers needed.

The only way this could get off the ground will be for the government to import labour from abroad…

It seems you are accusing OhOhOh of having fabricated her story Maizie. Rather unpleasant.

OhOhOh

Local bakery shop; owner is the baker and she employed 2 full time assistants. Due to ever increasing costs of raw materials, rent, energy costs and increase in NI contributions for her staff, she had to increase her prices to customers. As a consequence, she sold less and profits went down whilst overheads went up.. She reduced the hours her staff worked, resulting in them both becoming eligible to claim Working Tax Credit. It also meant that after many hours baking bread, pies and cakes, she had to stay after the shop closed to clean the shop, stock take and place orders with suppliers; a job her staff had previously done. She's absolutely exhausted from working from 05.00 to 18.00, 6 days a week but she can't afford to pay their increased NI contributions and contributions to their pensions on top of all the other increases and says that it was the final death by the thousandth cut.. The shop will close for the last time on Saturday afternoon. Her 2 members of staff will be unemployed and intend to claim any benefits they can. The shop, along with several others, will stand empty and so no business rate taxes will be paid to the local council which is verging on the brink of bankruptcy. Boosting growth? 🤔

Totally made up ‘example’ from the playbook of those who have resisted the notion of employees being paid a reasonable wage for years. It is nothing new. Victorian mill owners were saying the same things 200 years ago.

Thanks for the debunking, Silverbrooks

Agreed Silverbrooks. I hadn’t done the sums but realised it would be a small drop in profits.

What would those objecting like to see happen? People having to work for even less than minimum wage? More food banks for working people? Workers locked out of NI and associated benefits such as pension and sick pay? All so employers don’t lose a tiny amount of profit?

Mt hairdresser keeps banging on about how he can’t afford to take on an assistant because of rising costs. I have pointed out that the NI change doesn’t apply to him, but he persists. He is fully aware that he’s taking b*llocks though - last time I was there he was mid rant to another client when he caught my eye. I smiled at him and he changed the subject. It’s just an excuse to moan, not a real concern.

death by the thousandth cut

In the small bakery example, assuming the two full time employees are over 21 and working 40 hours a week on minimum wage, the wage bill will rise by just £62 per week (£12.21 ph - £11.44 ph = £0.77 * 40 hpw * 2 people).

Employer’s minimum contribution to a workplace pension is 3% adding less than £3 to the cost making a total of £65 pw to be found by the employer.

The minimum wage rises each year so small businesses will be used to incorporating that into their pricing.

The employer’s NIC will have been zero in 2024/25 and will continue to be zero in 2025/26 as the total payable for two employees was and will still be below the Employment Allowance. This has been raised from £5,000 to £10,500 pa to give additional protection to small businesses against the general rise in Employer’s Class 1 from April 2025.

The cost of raw materials, rent and energy costs are not set by the Chancellor.

The bakery, presumably open at least six days pw, would have to be selling very little indeed if it couldn’t incorporate increased costs of around £10 per day due to the rise in the minimum wage into its pricing.

OhOhOh

Yes, shooting herself and the Government in the foot (RR, I mean, not the bakery owner).

Well done Rachel. 😡

Local bakery shop; owner is the baker and she employed 2 full time assistants. Due to ever increasing costs of raw materials, rent, energy costs and increase in NI contributions for her staff, she had to increase her prices to customers. As a consequence, she sold less and profits went down whilst overheads went up.. She reduced the hours her staff worked, resulting in them both becoming eligible to claim Working Tax Credit. It also meant that after many hours baking bread, pies and cakes, she had to stay after the shop closed to clean the shop, stock take and place orders with suppliers; a job her staff had previously done. She's absolutely exhausted from working from 05.00 to 18.00, 6 days a week but she can't afford to pay their increased NI contributions and contributions to their pensions on top of all the other increases and says that it was the final death by the thousandth cut.. The shop will close for the last time on Saturday afternoon. Her 2 members of staff will be unemployed and intend to claim any benefits they can. The shop, along with several others, will stand empty and so no business rate taxes will be paid to the local council which is verging on the brink of bankruptcy. Boosting growth? 🤔

GrannyGravy13

Doodledog employers NI now starts for anyone on a salary of £5,000 pa (£96.15 per week) at a rate of 15% from this April, employees NI starts at £12,570 pa (£242 per week)

I wonder if this will limit the amount of part-time positions available?

It might encourage employers to offer more hours to each employee, if there is no 'get out' available by keeping their hours (and therefore wages) low. That would be a good thing, IMO.

Increases in the minimum wage feed through to the consumer.

PoliticsNerd

It seems odd to debate guesses when we don't have long to wait. Why not wait until we do know?

Great advice

It seems odd to debate guesses when we don't have long to wait. Why not wait until we do know?

There's that old saying - 'To make the rich work harder we pay them more: to make the poor work harder we pay them less.'

That is, of course the wrong way to do things, but it doesn't address the idea of paying people to do nothing. IMO the solution is to increase minimum wage (and ignore the moans of those who have to pay it out of their profits), and stop using taxpayers' money to make up the difference between a poverty wage and a living wage. If everyone can make a decent living with a full-time job there is no reason why they should be able to work part-time for the same money.

It's not about 'beating people back to work' - it's about making a fair society that doesn't foster the sort of resentment that drives people to extremism. That fairness has to start with decent wages though. It's equally unfair that employers (particularly those with offshore tax accounts) can use public money to keep employees on short hours and low pay.

MaizieD

^Therefore a part time job plus UC may bring in as much as the same job worked full time.^

If UC is cut to 45p for every £1 earned it must be a pretty poorly paid job.

The meanness towards people living on the poverty line can be quite breathtaking. Beat them all back to full time work. Starve them if necessary.

Though bankers who think it's not worth getting out of bed for a job that doesn't pay a bonus on top of their more than adequate salary are just fine?

👏👏👏

Let’s all stop paying taxes if they don’t pay for anything. Of course they do.

Your taxes don't pay anything, Barleyfields. If only people could get this straight in their heads there would be a lot less resentment and downright nastiness in the way that people in poverty are treated and spoken about.

Bankers are as much recipients of public money as are welfare recipients. The government issues our money, either directly by spending into the economy or indirectly by licensing some commercial banks to issue it by making loans. Without these sources of money there wouldn't be any money.