Robber Reeves mantra: "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.

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? 🤔

Well done Rachel. 😡

OhOhOh

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

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.

death by the thousandth cut

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.

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

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

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…

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!

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

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.

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.

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

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.

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?

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.

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

Didn't we used to have a big pool of skilled labour from Europe who mostly upped sticks and went home when the British made it clear that they were unwelcome in the UK in 2016?

I wonder if some of those unwelcome asylum seekers we currently house may have skills that the UK could use

MaizieD

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

Didn't we used to have a big pool of skilled labour from Europe who mostly upped sticks and went home when the British made it clear that they were unwelcome in the UK in 2016?

I wonder if some of those unwelcome asylum seekers we currently house may have skills that the UK could use

There were definitely a lot of Polish and Eastern European builders around here, the majority of them who we dealt and do still deal with applied for leave to stay when we finally departed from the EU.

Have no idea of the skill sets of migrants, but assume that they would have to undergo a strict testing process to ascertain that their skills were up to U.K. standards. Along with being able to read and write English in order to understand manuals and installation criteria for plumbers, electricians, heating engineers, they would need Gas Safe accreditation etc.

Like someone posted unthread the drop out rate of apprentices in the building and allied trades is high.

GrannyGravy13

MaizieD

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

Didn't we used to have a big pool of skilled labour from Europe who mostly upped sticks and went home when the British made it clear that they were unwelcome in the UK in 2016?

I wonder if some of those unwelcome asylum seekers we currently house may have skills that the UK could use

There were definitely a lot of Polish and Eastern European builders around here, the majority of them who we dealt and do still deal with applied for leave to stay when we finally departed from the EU.

Have no idea of the skill sets of migrants, but assume that they would have to undergo a strict testing process to ascertain that their skills were up to U.K. standards. Along with being able to read and write English in order to understand manuals and installation criteria for plumbers, electricians, heating engineers, they would need Gas Safe accreditation etc.

Like someone posted unthread the drop out rate of apprentices in the building and allied trades is high.

Yes, many Eastern Europeans still working around here.

Asylum seekers could be trained - if they want to do that kind of work, of course, but - guess what? We could encourage school leavers to apply for such courses too, if enough courses are available with enough lecturers (another consideration).

However, all will take a few years to train.

Many asylum seekers have skills and I’m sure would work if onky we allowed them to.

I’m not sure whether the lack of tradesmen in the UK is down to a lack of training placements, or a lack of uptake. It’s chicken and egg, because FE establishments will meet demand if enough would be students are applying for courses. It doesn’t seem to be an attractive career choice, I think that is the main concern.

Agree Casdon, added to which the culture of companies employing apprentices from school, who work for them 16-21 is long gone. It’s a pity because as well as ensuring properly qualified engineers/bricklayers etc, it provided boys with male role models
I know it wasn’t perfect

Interesting example of the bakery, of course none of us know how good a baker the owner was. Maybe the baking wasn’t that good and that was why the profits were low.
We also don’t know what the location was, or what marketing strategies were used. So not very scientific evidence.