We have now had the first budget from the new Labour Government. The reaction from the business world has said it all, within just a few minutes of the Chancellor getting to her feet, the guilt market spiked as the scale of the measures within the budget were revealed. Most disappointingly, it is small businesses who will bear the brunt of these fiscal changes.
The centrepiece of the budget is a massive tax rise for businesses through an increase in employer’s National Insurance contributions. The Government is hiking employer national insurance to 15% after pledging not to do so in their manifesto. They are also lowering the salary threshold at which an employer starts paying the tax from £9,100 to £5,000. As the Office for Budget Responsibility points out, this change will hamper wage growth and the opportunities available for employees.
Large businesses will feel the strain of these changes in the long term but is the small businesses of Ruislip, Northwood and Pinner that I am immediately concerned about. Twinned with the rise in the minimum wage, small businesses are in for a tough and uncertain few years.
The Government seems determined to stifle our economic growth and damage small and family run businesses through fiddling with inheritance tax thresholds. The Chancellor has effectively abolished Business Property Relief and Agricultural Property Relief. Small family run businesses will struggle to pass on the business and associated assets while family farms are now under threat.
Within my constituency, there are dozens of farms that straddle the border between London and the home counties. Many of these are proudly family run and have relied upon the Agricultural Property Relief to safeguard them for future generations. It is hard to sugarcoat the impact the budget will have on these farms; it is simply disastrous.
These measures will devastate small businesses, family run enterprises and ironically those on lower salaries. The Office for Budget Responsibility has outlined how the budget will cause wages to stagnate, inflation will rise and growth to stifle. Labour inherited a strong, resilient economy with high growth and low inflation, yet they have chosen to squander it all.
First published: My Local News, November 2024
