Rising National Insurance Costs Force Devon Businesses to Cut Jobs and Adjust Operations

The recent increase in National Insurance (NI) contributions from 13.8% to 15% has led to North Devon businesses bracing for financial strain, particularly in the hospitality sector. This adjustment comes with a significant threshold change, lowering the salary limit for NI payments from £9,100 to £5,000. Business owner Rob Braddick, running various entertainment venues in Westward Ho!, has forecasted an additional £180,000 in annual costs, prompting him to consider staff reductions and menu price hikes.

Mr. Braddick, who typically employs around 175 people during peak seasons, admitted he would have to consolidate staffing pools to manage these new financial pressures, expressing concerns about sustaining operations with reduced personnel. Similarly, Rick Turner, who owns The Big Sheep farm and theme park, anticipates an additional £40,000 burden due to NI changes combined with rising minimum wage pressures. He plans to hire fewer students and explore partnerships with other businesses to mitigate staffing challenges.

Meanwhile, Angus Murray from Pennywell Farm noted the difficulty of these adjustments while recognizing the enhanced pay benefits for employees as favorable in the long run. He stressed the necessity for businesses to adapt to these economic shifts while hoping they lead to increased productivity and growth.

The government defended the tax hikes as essential for stabilizing the economy and public finances, emphasizing its commitment to create opportunities for businesses. A spokesperson highlighted the importance of small businesses in the UK economy and reassured that measures taken in recent budgets are aimed at fostering competitive growth.

As the hospitality industry grapples with these changes, the emphasis will be on resilience and adaptation, raising pertinent questions about the balance between employee welfare and business sustainability.