Next CEO backs Lords battle against National Insurance tax rise
The chief executive of retail giant Next has backed an attempt in the House of Lords to change the planned change to employer’s National Insurance Contributions (NICs).
Lord Wolfson has supported amendments to the bill which have been tabled by Baroness Noakes.
In Labour’s Budget last Autumn, Chancellor Rachel Reeves said that the government would increase the amount of tax employers’ pay on staff wages (NICs) from 13.8 per cent to 15 per cent.
The Chancellor also reduced the threshold at which employees’ wages are eligible for the tax from £9,500 to £5,000 per year.
Lord Wolfson, who has been a Conservative peer since 2010, recently warned that tax rises announced in the Budget will make it “harder and harder for people to enter the workforce”.
Lord Wolfson told the BBC that the government’s move to hike national insurance (NI) would disproportionately hit entry-level jobs.
“The government did need to raise taxes. I’ve got nothing against lowering the threshold for NI in principle but the speed at which it is going to happen, the lack of consultation, that is the problem,” Lord Wolfson told the BBC earlier this month.
Baroness Noakes proposed “a phased introduction of the reductions to the secondary threshold” of the tax, according to The Times. The bill is at the committee stage in the Lords.
The change to NICs isn’t the only area the government have been criticised for lack of consultation with those affected: farmers, too, have been vocal about a of dialogue with the Government prior to changes to inheritance tax on farmland.
Next faces huge tax rise if bill passes
The change to NICs, particularly the lower threshold, came as a shock to businesses in labour intensive, part-time reliant businesses like hospitality and retail.
“NICs were out of the blue,” Pizza Pilgrim’s co-founder Thom Elliot told City PM last year. “[They] will have an impact.”
A fifth of hospitality’s workforce will be pulled into the new employer NICs threshold for the first time when the changes come into effect, according to UK Hospitality.
“The extent of the impact will be enormous,” Kate Nicholls, Chief executive of UKHospitality, said. “This tax is already forcing businesses to abandon investment, change recruitment plans, reduce headcounts and increase prices to cope with these cost increases.
Next, which faces a bill of £67m, has said it will have to raise prices by one per cent.
Tesco, which faces a bill of £250m, has said it will aim to limit the inflationary impact but hasn’t ruled out higher prices.