Concern Over Employer National Insurance Increase For Local Businesses

Employers in Inverclyde have expressed fears for businesses when new National Insurance rates come into force.

Contributions paid by companies will rise from 13.5 per cent of their employees' salaries to 15 per cent when the new financial year begins on April 6.

That comes on top of an increase in the national living wage on April 1 from £11.44 to £12.20  for people over the age of 21.

The national minimum wage for those aged 16 to 20 has also increased.

Three business owners contacted by the Tele all said the increases in employers' NI contributions would affect their ability to grow their firms and take on new staff.

Drew Gallagher

Drew Gallagher, managing director of Cardwell Garden Centre at Lunderston Bay, said: "To me, it is a vicious circle that you are putting more pressure on the cash cow that the government seem to think we are.

"In recent years all businesses have faced a constant pressure, not only to make a profit but also to make ends meet.

"The reality is that they will be forced to pass on the cost to the consumer just to stay afloat."

Cardwell Garden Centre was founded in 1962 by Drew's late father Eric, and currently employs 70 people.

He added: "We built a business since then by investing profits. You can't do that if you don't have any profits.

"It is the same for any business. It is simple economics."

Drew says increases in the minimum wage will also have an impact on traders and believes some smaller businesses are simply not paying it.

He added: "Retail is a struggle. You are constantly fighting to stay afloat.

"It has never recovered fully since Covid. We have also had to compete with increases in business rates. Everything has gone up and the margins have gone down."

Gavin McDonagh - Image: George Munro

Gavin McDonagh is managing director of Holt Leisure who manages three marinas, including Inverkip and is a former President of Inverclyde Chamber of Commerce.

The marinas employ between 70 and 100 and say the National Insurance increases are a big hit for businesses like his.

He added: "We are all supportive of the need for rises in the living wage.

"But the government needs to realise when raising National Insurance that employers are already responsible for so many areas of our employees social welfare including sick pay, maternity pay and leave, and pension provision.

"When our margins are squeezed by an additional fiscal burden (National Insurance) it can impact investment and we must realise it is inflationary, which lessens the good of the higher wage rate."

Andrew Bowman is a Director and co-founder of Gourock-based property firm, Bowman Rebecchi.  

He employs 16 people and believes that the National Insurance increases will have an impact on his business and others across Inverclyde.

Andrew added: "The government is talking about growth but increases like this make it fairly difficult.

"Many businesses will attempt to get more from their existing staff rather than taking on more.

"Most will be looking at how things pan out in the next three months and how it affects costs and cash flow before they make investment decisions about their business."

Andrew Bowman. Image - Duncan Bryceland

Bowman Rebecchi manages more than 1,500 properties and is part of the voluntary Real Living wage scheme which means staff receive a minimum of £12.60 an hour.

They had planned to take on an extra two members of staff, but Mr Bowman says that has been put on hold until they see the impact of the National Insurance increases.

He added: "It has made what is a difficult market even more difficult to grow.

"There are more roles we want to take on for the business but because of the increases we have got to step back and draw breath.

"Like most, we are just being cautious. If the government wants growth it has to work with business.

"Many coming out of Covid are just trying to thrive rather than survive. For most businesses we engage with, it is still hand to mouth each month."

The UK government has said the National Insurance rise is necessary to fund public services. 

Announcing the change in her Budget speech in October, Chancellor Rachel Reeves acknowledged that it was "a difficult choice", but said it would raise an estimated £25 billion a year.

This article and images appeared in the Greenock Telegraph.