Dorset Chamber chief executive Ian Girling has written to Chancellor Rachel Reeves, highlighting business concerns over the impending rise in employer National Insurance and inviting her to visit Dorset. He has also urged Dorset’s MPs to advocate for local businesses as they face increasing financial pressures.
With just 50 days until the changes take effect on 6 April, businesses are warning of significant consequences. A new survey by Dorset Chamber has revealed widespread anxiety, with 91% of respondents expressing concern over the forthcoming hike. Many businesses fear they will be forced to halt recruitment, freeze pay rises, cut jobs, or scale back investment.
Under the new rules, employers will pay 15% National Insurance on salaries above £5,000, up from the current 13.8% on salaries above £9,100. The increase is expected to generate £25bn annually.
Dorset Chamber—the county’s leading business support organisation—has written to the Chancellor and local MPs to share the survey findings and invite the Chancellor to meet with affected businesses.
Ian Girling, chief executive of Dorset Chamber, said: “In what is already an extremely challenging business climate, these findings reflect very serious concerns around the impact of these increases.
“Many are around sustaining and growing employment, future pay rewards for a workforce that already faces severe cost of living increases, business growth and investment and, ultimately, the survival of many businesses.”
Survey findings:
- 58% of respondents are ‘very concerned’ about the increase
- 33% are ‘somewhat concerned’
- 9% are ‘not concerned’
A broad range of businesses, including chamber members and non-members from multiple sectors, participated in the survey. Respondents highlighted the following expected impacts:
- 32% will stop recruitment
- 54% will be unable to increase pay
- 45% will reduce investment
- 71% anticipate a negative impact on profitability
- 43% foresee cash flow difficulties
- 42% may need to cut staff
Dorset Chamber, which represents nearly 700 members employing 37,000 people, has been campaigning against the rise, warning of its potential economic fallout.
Many businesses also provided comments on the anticipated consequences. IT services provider ITCS, which operates across the UK with a base in Dorchester, stated: “The increase in National Insurance contributions will raise employment costs, forcing many businesses to reduce staff or freeze hiring to manage the financial burden.
“This is likely to result in higher unemployment, lower consumer spending and a negative impact on economic growth.”
The Healthbus Trust, a Bournemouth-based charity providing healthcare for people experiencing homelessness, added: “The recent government Autumn budget, coupled with an increase in National Insurance for charities, places an even greater strain on an already overstretched sector.
“Charities play a vital role in improving lives, enhancing well-being and often step in where public services fall short. These additional financial burdens risk limiting their ability to deliver essential support, threatening the stability of services that vulnerable people rely on every day.”
These concerns have been included in Dorset Chamber’s letter to the Chancellor. In the letter, Ian Girling writes: “We fully appreciate that public services need to be funded.
“However, the results highlight a clear need for policies that promote business growth rather than indiscriminate taxation that affects all businesses, regardless of their financial stability.
“We would very much like to invite you to Dorset to meet with our business community to discuss these issues and urge you to consider the implementation of a more business-friendly approach rather than measures that inhibit business growth and sustainability.”
Ian Girling added: “The NI rises come as businesses also face the prospect of employment law changes as part of the government’s ongoing tax on jobs and growth.
“It will have a double-whammy impact which has the potential to severely affect businesses and the local economy.
“As well as the Chancellor, we are very keen to hear from our MPs about this issue and about how they are going to stand up for business in the county going forward.”
Dorset’s MPs are Sir Christopher Chope (Christchurch), Neil Duncan Jordan (Poole), Lloyd Hatton (South Dorset), Tom Hayes (Bournemouth East), Simon Hoare (North Dorset), Edward Morello (West Dorset), Vikki Slade (Mid Dorset and North Poole), and Jessica Toale (Bournemouth West).
A total of 105 businesses took part in the survey, collectively employing nearly 8,000 people, including charities and third-sector organisations, which will be affected both directly and indirectly as cost-cutting measures take effect.
According to the House of Commons Library, HMRC’s impact assessment states that around 1.2 million employers will be affected by the changes. Approximately 250,000 employers will see a decrease in their secondary Class 1 NICs liability, while 940,000 will see an increase. Around 820,000 employers will see no change.
The changes to employer NICs are expected to raise between £23.8 billion and £25.7 billion per year from 2025/26 to 2029.
Smaller employers can claim an ‘employment allowance’, which provides a deduction on NIC contributions below £5,000, provided their total NIC liability in the previous year was below £100,000.
Founded in 1949, Dorset Chamber is the only chamber in the county accredited by the British Chambers of Commerce. It is recognised as the leading chamber nationally, with 120 five-star reviews on Google.
Dorset Chamber’s vision is ‘a vibrant and prosperous Dorset business community that enhances the quality of life for all.’
For more information on Dorset Chamber’s work and the support it offers businesses, visit https://dorsetchamber.co.uk/.
