In its manifesto, Labour promised to “kickstart economic growth” by being pro-business.
Yet small business owners were left dismayed by Rachel Reeves’s first Budget. The Chancellor last week announced the National Insurance rate that employers pay will increase from 13.8pc to 15pc, in a blow to businesses.
She also reduced the threshold at which employers pay the levy on employee salaries from £9,100 to £5,000. Ms Reeves claimed it would raise £25bn for the Treasury but this has been disputed by the Institute for Fiscal Studies.
Small business owners such as Sean Hughes, 43, have told The Telegraph that the Budget will be “crippling” for the industry.
Mr Hughes owns two pubs in St Albans and said the rises to minimum wage and National Insurance would have a detrimental impact on business. “It will probably cost us £25,000 to £30,000 just for one pub alone. That’s coming out of our profit and means the price of the pint is going to get higher and higher,” he said.
He added the industry has been “so saturated” by taxation, the energy crisis and soaring costs, that they will “have to pass every single increase on”.
Mr Hughes added that the 1p on the £1 relief to draught duty would not have a sizeable effect on his business: “I find it laughable that they think that’s actually helping the country.”
Annabel Lui, who together with her sister Emily runs bakery Cutter & Squidge in London, said the National Insurance rise might force them to “reduce headcount”, while reconsidering potential pay rises.
“We employ 70 people at the moment and more during peak season, when we employ up to 100,” she said, adding that the tax rises announced by Ms Reeves would “directly hit our bottom line and will impact how we view our wage bill overall and what we can afford”.
Business partners Jamie Hazeel and Kamran Dehdashti, who own the hospitality chain The Little Door & Co, said the Budget was “intensely demotivating” for the industry.
“We have been in incredibly difficult economic times and we feel we have been hit from all sides economically. It’s clear to some extent this impact will be exacerbated from this Budget,” Mr Hazeel warned.
Since 2020, hospitality businesses could receive a 75pc reduction in their business rates bill up to a threshold. But the Chancellor slashed this to 40pc, which Mr Hazeel said would be a “major blow”.
“The bill is well into the six figures for a business of our size,” he said. Mr Hazeel also said knocking 1p off the price of a pint was “pretty arbitrary”. This was an “absolutely terrifying” time for the industry, he added.
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