Peter Fortune MP's latest column in the News Shopper.
Employers locally face tough choices this year. Every business, charity, and organisation I speak to across Bromley and Biggin Hill is debating how to handle April’s rise in national insurance after Labour broke their promise to freeze the tax.
The tax hike will cost employers £25 billion nationally. Employers must pay a tax bill worth 15% of the employee’s salary for every job they create. The threshold for employers to start paying has also been lowered from £9,100 to £5,000. On average, it will not cost employers £800 more per person they employ.
When I sat in the House of Commons, listening to Chancellor Rachel Reeves announce the tax hike in her Budget, I gulped - as most people who employed people before would do. Sadly, too few people in the Labour cabinet have business experience. They think businesses can afford to pay an extra £25 billion; they can’t.
Any employer will tell you what this tax rise means. With higher costs for every person they employ, they’ll either need to raise prices, reduce people’s hours or make redundancies. National Insurance is called a jobs tax because it makes it more expensive to employ people and fewer jobs are created as a result.
What does this mean for Bromley and Biggin Hill? Well, let’s look at two examples.
I recently met the franchise owner of McDonald’s in Bromley’s Market Square. Although the company is a big brand, its franchise model means its franchisees are often medium-sized local businesses. The owner employs over 800 people and invests back into the community.
His wage bill is increasing by more than £400,000 next year thanks to Labour’s jobs tax. That means he’s reconsidering his investment plans and the employment opportunities that will create. It’s a business that promotes from within, with its managers starting in the kitchen and working their way up as the owner did.
That’s just one example of how the jobs tax is limiting growth. But I know countless others, I won’t name here, who will have to let people go because they cannot afford the tax bill.
However, Labour’s jobs tax will affect more than just businesses.
I spoke to South East London Mind about its impact on their excellent charitable work in Bromley. Their wage bill will increase by £190,000 next year. The charity is a lifeline for many people. Unlike a business, it can’t raise prices or forgo some profits.
Instead, the charity must fundraise more or renegotiate NHS contracts to pay the tax bill. It’s already a lean organisation, so if it can’t find more money, it will have to make savings, inevitably providing fewer services locally. That’s a huge shame.
The extra tax Labour is asking them to pay would fund five mental health professionals who could support 1,000 people annually. Instead of investing in more staff, they’ll be forced to hand it to the taxman.
Every way you look at it, Labour’s tax hike will hurt working people. Prices are rising, investment is falling, jobs are at risk, and charities are making cuts. The Government must change direction.
