National Insurance Contributions: SMEs

13 Mar

Question

The Question session centered around the concerns regarding impact of changes in employer national insurance contributions (NICs) on SMEs. The primary concern raised was from Mr. Alistair Carmichael, representing Orkney and Shetland, who brought forward the potential negative implications of these changes for businesses in the visitor economy sector within his constituency. Carmichael emphasized that SMEs might have to reduce hours for part-time workers or cut back on seasonal hiring due to increased financial pressure stemming from the NIC changes.

Community Assessments - SMEs forecasting layoffs and reduction in part-time hours

Concerns were directly raised by Mr. Carmichael based on feedback from businesses in Orkney and Shetland's visitor economy sector.

November 2024 - Publication of Treasury's tax information note

Gareth Thomas referred to an official document expecting to guide understanding on the financial implications of the NIC policy changes.

Gareth Thomas responded by pointing to a Treasury tax note published in November 2024 that outlined the expected impacts these policy changes would have on businesses and the Exchequer. He acknowledged Carmichael’s concerns and expressed openness to collaborating with Scottish and other devolved governments to mitigate negative impacts. Thomas also highlighted an issue with the Scottish Government's current stance on retail hospitality relief, questioning their lack of support given the increased Scottish budget and suggesting they should support retail sectors similarly to measures taken in England.

Outcome

The session did not lead to immediate policy changes, but it did extract a commitment from Gareth Thomas to work with devolved governments to nurture a business environment that could mitigate the potential drawbacks of the NIC changes. No new data was unveiled, but the discussion opened avenues for cross-government collaboration.

Key Contributions

Mr Alistair CarmichaelRepresentative

Liberal Democrats

Expressed concern about the negative impact of NIC changes on local SMEs, especially in the visitor economy, fearing reduced hours for part-time staff and layoffs. Advocated for ministerial cooperation to avoid a crisis of confidence.

Gareth ThomasMinister

Referred to a Treasury tax information note outlining NIC changes' impacts. Willing to collaborate with devolved administrations to enhance the business environment. Criticized the Scottish Government's lack of retail sector support despite its larger budget.

Original Transcript

Mr Alistair Carmichael

Orkney and Shetland

Question

UIN: 903174

13. What recent assessment he has made of the potential impact of changes to employer national insurance contributions on small and medium-sized enterprises.

The Parliamentary Under-Secretary of State for Business and Trade

Gareth Thomas

10:17

The Treasury published a tax information and impact note in November 2024, alongside the introduction of the Bill containing the employer national insurance contribution changes.

It sets out the impact of the policy on the Exchequer and the impacts on business, and that approach is consistent with previous tax changes.

Mr Carmichael

10:17

The impact I hear from SMEs in my constituency, predominantly in the visitor economy, is that they are anticipating cutting the hours of part-time staff or laying them off and reducing the number of seasonal employees that they will take on.

Will the Minister take those concerns seriously and work with Ministers in the Scottish Government to ensure that the legitimate concerns of SMEs in my constituency do not blossom into a full blown crisis of confidence?

Gareth Thomas

I am always happy to work with the Scottish Government and other devolved Governments on how we can improve the business environment. I am sure the right hon. Member will join me in encouraging the Government in Scotland to mirror the changes we have made to business rates relief.

Given the sizeable increase in the Scottish budget, it is somewhat surprising that the SNP has not been willing to support the retail sector through an extension of retail hospitality relief.

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