Results of a major new survey have exposed the depth of distress among businesses in Dorset about the impact of a hike in employer National Insurance.

Some 91 per cent of respondents in the Dorset Chamber poll said that they were concerned about the rise due to take effect in April.

Many warned that they will be forced to freeze recruitment and pay rises, cut jobs or halt investment.

From April, employers will have to pay National Insurance (NI) at 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100 currently.

The chamber – Dorset’s leading business support organisation and the county’s voice of business – has written to the Chancellor Rachel Reeves and Dorset MPs about the survey results.

It has also invited the Chancellor to visit Dorset to speak to those businesses set to be hardest hit by the hike.

On February 16 there will be just 50 days to go to the introduction of the rise – expected to generate £25bn annually - on April 6.

Dorset Chamber chief executive Ian Girling 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.”

The results of the survey show:

·                     58% of respondents are ‘very concerned’ at the increases

·                     33% are ‘somewhat concerned’

·                     9% are ‘not concerned’

A wide range of businesses and employers – chamber members and non-members – from different sectors took part in the survey.

Businesses responding stated the impact means they will:

·                     Stop recruitment: 32% of businesses

·                     Unable to make pay rises: 54%

·                     Reduce investment: 45%

·                     See a negative impact on profitability: 71%

·                     See a negative impact on cash flow: 43%

·                     May need to reduce staff levels: 42%

Dorset Chamber, with nearly 700 members representing 37,000 employees, has been campaigning against the rises on behalf of businesses in the county.

Many businesses also left comments in the survey.

IT services provider ITCS, working across the UK with operations in Dorchester, said: “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 is a charity providing healthcare to people experiencing homelessness in Bournemouth and the surrounding area. It stated: “The recent government Autumn budget, coupled with 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.”

Comments from businesses have been included in the letter.

In the letter Ian 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 added: “The NI rises come as businesses also face the prospect of employment law changes as part pf 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 MP (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 responded to the survey, collectively employing nearly 8,000 staff. They include charities and third sector businesses who will be affected by the rise directly and as a result of people cutting costs.

According to the House of Commons Library, HMRC’s impact assessment states the changes will affect about 1.2 million employers.

Around 250,000 employers will see their secondary Class 1 NICs liability decrease and around 940,000 will see it increase. Around 820,000 employers will see no change.

It says that the changes to employer NICs are forecast to raise between £23.8 billion and £25.7 billion a year, for the five years 2025/26 to 2029.

Small employers can claim an ‘employment allowance’ which gives them a deduction on NIC contributions below £5,000, provided the NIC they paid or still owe for the previous year was below £100,000.

Dorset Chamber, founded in 1949, is the only chamber in the county accredited to the British Chambers of Commerce.

Ranked as the leading chamber nationally with 120 five-star reviews on Google, the chamber has a vision for ‘a vibrant and prosperous Dorset business community that enhances the quality of life for all’.

Visit https://dorsetchamber.co.uk/ for more about the chamber’s work and the support it offers to businesses in Dorset.