Devon businesses urge tax relief ahead of Budget as hiring costs rise
Employers in Plymouth say rising National Insurance and wage costs are forcing them to delay hiring and expansion plans.
At a glance
- Devon business owners say rising National Insurance and minimum wage costs are causing them to delay hiring and expansion.
- Hospitality leaders in Plymouth are renewing calls for a VAT reduction from 20% to 10% to help the struggling sector.
- The Treasury says it is supporting firms with business rates cuts, a corporation tax cap and NI relief for hiring young workers.
Business owners in Devon are urging the chancellor to cut employment taxes in the upcoming Budget, warning that recent increases in National Insurance contributions and the minimum wage are forcing them to postpone hiring and expansion plans.
Hiring plans on hold
Michelle Bunker, who runs WGP Maintenance in Plymouth, said her message to the chancellor is simple: reduce employer National Insurance contributions. Tim Randell, owner of Links Publishing, said he has two positions he wants to fill but is holding back because of employment costs. "All we've had for the last two Budgets is more tax, more expense, the living wage," he said.
In the 2024 Budget, Rachel Reeves announced that from April 2025 companies would pay National Insurance at 15% on salaries above £5,000, up from 13.8% on salaries above £9,100. The legal minimum wage for workers over 21 also rose from £11.44 to £12.21 an hour from the same date.
Kevin Miller, head of Apex HR in Plymouth, described small businesses as "the backbone of the whole economy" and called for tax relief to lower the cost of employing people.
Hospitality sector seeks VAT cut
The cost-of-living crisis is also hitting charities. Elsbeth Hallam of Hugs Children's Cancer Charity in Plymouth said donors are tightening their spending, reducing the funds available to support families.
In hospitality, tens of thousands of people are employed across Devon. Industry leaders, backed by celebrity chef Tom Kerridge, have long campaigned for a VAT reduction from 20% to 10% for pubs and restaurants. Melanie Williams, events manager at the Duke of Cornwall Hotel, said any government support would benefit the whole sector. Pete Adams, general manager of the Moxy Hotel in Plymouth, argued a VAT cut would let businesses pass savings to customers, driving more trade and ultimately returning similar revenue to the Treasury.
Government response
The Devon Business Show, hosted by Devon Chamber of Commerce at the Plymouth Life Centre, heard from chief executive Helen Wylde-Archibald that businesses are "planning for a better future" and need a "soft touch" with the Budget.
A spokesperson for HM Treasury said the government is "on the side of business" and highlighted business rates cuts, a cap on corporation tax, £4.3 billion of support to limit bill rises, and employer National Insurance contributions relief when hiring under-21s and apprentices under 25.
Source: BBC Business.
Questions and answers
- Why are Devon businesses holding back on hiring?
- Employers cite the increase in employer National Insurance contributions to 15% on salaries above £5,000 and the rise in the minimum wage to £12.21 an hour as making new hires too expensive.
- What tax changes are hospitality businesses requesting?
- Pubs, hotels and restaurants in Devon want VAT cut from 20% to 10%, arguing it would boost customer spending and ultimately benefit the Treasury.
- How has the government responded to these concerns?
- HM Treasury says it is on the side of business, pointing to business rates cuts, a cap on corporation tax, £4.3 billion in bill support and National Insurance relief for hiring under-21s and apprentices under 25.
