Firms worry over feeling the pinch of budget changes

The Government announced an increase in the rate of employer-based National Insurance contributions as part of its autumn budget statement on Wednesday, October 30.

The move will see employer contributions increase from 13.8 per cent to 15% from April, while the threshold to start paying the tax will plummet from £9,100 to £5,000.

However, some of the region's small and medium sized employers are concerned about the decision.

Stuart Smith, Managing Director of commercial heating and ventilation specialist Lord Combustion Services which employs 45 staff at its Oldbury base, warned the move make it more difficult for firms to train up staff for skilled roles.

"I think businesses are being squeezed a bit," he said.

"We're currently recruiting, although we're operating in a very competitive market. We do a lot of work for the public sector, so we're finding we're driven right down on our rates we can charge. We find the cost of employing a skilled tradesman is going up but our rates are being driven down so we are being squeezed at the moment.

"Minimum wage [increases] obviously makes it harder for us to take on semi-skilled staff and to train people up, so it does stifle that activity a little as we tend to take on more mature candidates for training when we can."

The Chancellor also announced the creation of Skills England, a new government training and skills body, with moves to improve the region's engineering skill base welcomed by Mr Smith who added that there was currently "not enough focus" from the Government on training for skilled trades.

Meanwhile Matt Hunter, Industrial Director at Dudley-based firm MET Recruitment, said that while the rise was good news for workers, there would be a "knock on" effect to rising costs in the labour market.

"I oversee the temporary industrial part of the business, where we have over 200 people per day working for us and I would say the majority of them are working on national minimum wage, so they're the ones that are probably most affected.

"One of the biggest costs for companies out there is labour and the labour cost, so by increasing National Minimum Wage and employer contributions; whatever you're forecasting now for next year you're going to have to take both of those into consideration and the only way of bringing more money in is either putting prices up or making cost savings."

Elsewhere, Matt Nicol, Managing Director of midlands residential sales and letting agency Nicol and Co, added that the cumulative effect of the budget placed a "significant strain" on employers.

"As a business owner with 41 staff, this isn’t just an isolated wage bump, it’s a substantial shift that requires reworking a pay structure. Add in the announced rise in Employers’ National Insurance, and suddenly, each new policy adds up to a huge increase in operational costs," he said.

"Like many business owners, I’m committed to adapting and finding ways to support my team, but the cumulative impact of these policies is hard to ignore. If the objective is to strengthen our economy, then we need policies that support businesses rather than weighing them down."