Peterborough business chiefs voice fears for recovery after health tax hike
Business leaders in Peterborough have warned that Prime Minister Boris Johnson’s National Insurance hike could harm the city’s recovery after the Covid-19 pandemic.
Company chiefs have spoken out after Mr Johnson announced a 1.25 per cent increase in National Insurance for employees and employers from next April plus higher tax on dividend income and with working pensioners expected to pay National Insurance for the first time.
The hike, called a Health and Social Care Levy, is expected to generate £36 billion over three years to ease pressures on the NHS and social care sector.
Vic Annells, chief executive of Cambridgeshire Chamber of Commerce, said: “The proposed National Insurance increases will be difficult for businesses at this crucial time of economic recovery.
“It will be a significant cost on firms that are already facing other cost pressures as they recover from the pandemic.”
Iain Forsythe, chairman of PKB Trade, in Wainman Road, Peterborough, said: “Customers are likely to face the cost of the rise personally and in the cost of goods they purchase as the National Insurance increase will have to be passed on to make a business sustainable.”
William Burgess, chairman of Burgess Farms, in Yaxley, said: “National Insurance is a tax on jobs.
“This recent move has added 1.25 per cent to our payroll costs which are already going up by about 10 per cent due to a shortage of available people.
“Our margins are tight and our sector currently only makes two to five per cent net margin. So 1.25 per cent is a big chunk out of that margin.
He added: “I believe that the increase will have to be passed on in higher prices and so this will push inflation higher and erode peoples take home pay in real terms.
“It will hamper business in their covid recovery because the loss of real terms income will lead to less demand for goods and services.”
Adrian Posnett, managing director of Oakham Ales, in Maxwell Road, said: “We’ve been hit by a succession of increased costs over the last few months and a rise in the employer NI contribution might add quite significantly to these.
“We also worry about the effect the increase will have on customers’ disposable income at a time when our industry is still struggling to return to normal levels of business.”
Peterborough MP Paul Bristow said: “The Government stepped in to help our businesses with funding and furlough, protecting jobs.
“Many companies in Peterborough only survived because of this intervention.”
He added: “It’s absolutely right for the Government to grasp the nettle and deal with the enormous NHS backlog, while properly funding social care.”
“We have to honest with people. The only way to pay for this – other than even more borrowing – is through tax.
“This is a specific levy to fund social care and our NHS. And I am confident it will be supported by most people and businesses.”