Connect with us

Published

on

Business groups have criticised plans for a National Insurance hike as a drag on jobs growth just as firms seek to recover from the COVID-19 crisis.

The 1.25 percentage point increase in NI contributions is intended to pay for reform of the social care system.

But the British Chambers of Commerce (BCC) said it would hit the wider economic recovery while Make UK, representing the manufacturing sector, said it was “ill-timed as well as illogical”.

The announcement comes as businesses try to rebuild after more than a year of lockdowns and trading restrictions – which has left some of them heavily indebted – and the furlough support scheme draws to a close.

Firms are also facing cost pressures due to strained supply chains and labour shortages thanks to Brexit and the pandemic.

Suren Thiru, head of economics at the BCC, said: “Businesses strongly oppose a rise in National Insurance contributions as it will be a drag anchor on jobs growth at an absolutely crucial time.

“Firms have been hammered by 18 months of COVID-related restrictions and have built up huge debt burdens.

More from Business

“This rise will impact the wider economic recovery by landing significant costs on firms when they are already facing a raft of new cost pressures and dampen the entrepreneurial spirit needed to drive the recovery.”

Stephen Phipson, chief executive of Make UK, said: “Industry fully supports the need to increase funding to the NHS and social care which is one of the most important issues we face as a society.

Please use Chrome browser for a more accessible video player

UK’s furlough scheme starts to wind down

“However, an increase in National Insurance is not just a tax on employers but also employees.

“Putting a tax on jobs and workers at a time when government is pulling the furlough scheme is ill-timed as well as illogical.

“Government should be putting in place measures to protect jobs and incentivise recruitment.

“An increase to NI would have the opposite effect.”

Mike Cherry, national chair of the Federation of Small Businesses, said it was “an anti-jobs, anti-small business, anti-start up manifesto breach”.

“These hikes will have business owners and sole traders feeling demoralised at the point when they’re trying to recover from the most difficult 18 months of their professional lives,” Mr Cherry said.

“For those thinking about starting up, they send completely the wrong message.

“Business owners who have done all they can to retain and support their staff during the pandemic are now being punished for that loyalty with an £11bn increase in NICs [National Insurance contributions], which essentially serve as a jobs tax.

Please use Chrome browser for a more accessible video player

‘Perfect storm’ for retailers as Brexit and pandemic hit, says babywear boss

“This regressive levy hits employers and sole traders without meaningful regard for how their business is performing.

“This increase will stifle recruitment, investment and efforts to upskill and improve productivity in the years ahead.”

Business groups also took aim at a 1.25 percentage point increase in the rate of tax on dividend income from shares.

ISA savings accounts are exempt from the tax and it is only payable on dividend income over £2,000 meaning that even outside ISAs, 60% of people with dividend income would not be affected according to the government.

However, small company directors look set to lose out, the Institute of Directors (IoD) said.

Kitty Ussher, the IoD’s chief economist, said: “Incorporated sole traders and other owner-managers, who relied on dividend income, were the only group of workers that were not supported by government during the pandemic.

“Employees and the self-employed were provided with financial support to tide them over, but this group was not.

“While it may make sense in the long-term to align tax rates for all types of income, this government has shown through its actions a total lack of understanding to the very real difficulties faced by owners of the smallest businesses in Britain.”

Continue Reading

Business

Ryanair urges EU chief to ‘quit’ over air traffic strike disruption

Published

on

By

Ryanair urges EU chief to 'quit' over air traffic strike disruption

The boss of Ryanair has told Sky News the president of the European Commission should “quit” if she can’t stop disruption caused by repeated French air traffic control strikes.

Michael O’Leary, the group chief executive of Europe’s largest airline by passenger numbers, said in an interview with Business Live that Ursula von der Leyen had failed to get to grips, at an EU level, with interruption to overflights following several recent disputes in France.

The latest action began on Thursday and is due to conclude later today, forcing thousands of flights to be delayed and cancelled through French airspace closures.

Money latest: ‘Lifeblood of mortgage market’ enjoying lower rates

Mr O’Leary told presenter Darren McCaffrey that French domestic flights were given priority during ATC strikes and other nations, including Italy and Greece, had solved the problem through minimum service legislation.

He claimed that the vast majority of flights, cancelled over two days of action that began on Thursday, would have been able to operate under similar rules.

Mr O’Leary said of the EU’s role: “We continue to call on Ursula von der Leyen – why are you not protecting these overflights, why is the single market for air travel being disrupted by a tiny number of French air traffic controllers?

More from Money

File photo dated 02/09/22 of a Ryanair Boeing 737-8AS passenger airliner comes in to land at Stansted Airport in Essex. Ryanair has revealed around 63,000 of its passengers saw their flights cancelled during last week's air traffic control failure which caused widespread disruption across the industry and left thousands of passengers stranded overseas. In its August traffic update, the Irish carrier said more than 350 of its flights were cancelled on August 28 and 29 due to the air traffic contr
Image:
Ryanair has cancelled more than 400 flights over two days due to the action in France. File pic: PA

“All we get is a shrug of their shoulders and ‘there’s nothing we can do’. We point out, there is.”

He added: “We are calling on Ursula von der Leyen, who preaches about competitiveness and reforming Europe, if you’re not willing to protect or fix overflights then quit and let somebody more effective do the job.”

The strike is estimated, by the Airlines for Europe lobby group to have led to at least 1,500 cancelled flights, leaving 300,000 travellers unable to make their journeys.

Ryanair chief executive Michael O'Leary speaks to journalists during a press conference at The Alex Hotel in Dublin. Picture date: Thursday October 3, 2024.
Image:
Michael O’Leary believes the EU can take action on competition grounds. Pic: PA

Ryanair itself had axed more than 400 flights so far, Mr O’Leary said. Rival easyJet said on Thursday that it had cancelled 274 services over the two days.

The beginning of July marks the start of the European summer holiday season.

The French civil aviation agency DGAC had already told airlines to cancel 40% of flights covering the three main Paris airports on Friday ahead of the walkout – a dispute over staffing levels and equipment quality.

Mr O’Leary described those safety issues as “nonsense” and said twhile the controllers had a right to strike, they did not have the right to close the sky.

DGAC has warned of delays and further severe disruption heading into the weekend.

Many planes and crews will be out of position.

Mr O’Leary is not alone in expressing his frustration.

The French transport minister Philippe Tabarot has denounced the action and the reasons for it.

“The idea is to disturb as many people as possible,” he said in an interview with CNews.

Passengers are being advised that if your flight is cancelled, the airline must either give you a refund or book you on an alternative flight.

If you have booked a return flight and the outbound leg is cancelled, you can claim the full cost of the return ticket back from your airline.

Continue Reading

Business

CBI kicks off search for successor to ‘saviour’ Soames

Published

on

By

CBI kicks off search for successor to 'saviour' Soames

The CBI has begun a search for a successor to Rupert Soames, its chairman, as it continues its recovery from the crisis which brought it to the brink of collapse in 2023.

Sky News has learnt that the business lobbying group’s nominations committee has engaged headhunters to assist with a hunt for its next corporate figurehead.

Mr Soames, the grandson of Sir Winston Churchill, was recruited by the CBI in late 2023 with the organisation lurching towards insolvency after an exodus of members.

Money latest: Has bond market calmed after chancellor’s tears?

The group’s handling of a sexual misconduct scandal saw it forced to secure emergency funding from a group of banks, even as it was frozen out of meetings with government ministers.

One prominent CBI member described Mr Soames on Thursday as the group’s “saviour”.

“Without his ability to bring members back, the organisation wouldn’t exist today,” they claimed.

More from Money

Rupert Soames
Image:
Rupert Soames. Pic: Reuters

Read more:
Starmer could be ousted as PM ‘within months’
Reeves’s tears a hard watch but reminder of her challenges

Mr Soames and Rain Newton-Smith, the CBI chief executive, have partly restored its influence in Whitehall, although many doubt that it will ever be able to credibly reclaim its former status as ‘the voice of British business’.

Its next chair, who is also likely to be drawn from a leading listed company boardroom, will take over from Mr Soames early next year.

Egon Zehnder International is handling the search for the CBI.

“The CBI chair’s term typically runs for two years and Rupert Soames will end his term in early 2026,” a CBI spokesperson said.

“In line with good governance, we have begun the search for a successor to ensure continuity and a smooth transition.”

Continue Reading

Business

Ryanair and easyJet cancel hundreds of flights over air traffic control strike

Published

on

By

Ryanair and easyJet cancel hundreds of flights over air traffic control strike

Ryanair and easyJet have cancelled hundreds of flights as a French air traffic controllers strike looms.

Ryanair, Europe’s largest airline by passenger numbers, said it had axed 170 services amid a plea by French authorities for airlines to reduce flights at Paris airports by 40% on Friday.

EasyJet said it was cancelling 274 flights during the action, which is due to begin later as part of a row over staffing numbers and ageing equipment.

Money latest: Bond market fires warning shot at Downing St

The owner of British Airways, IAG, said it was planning to use larger aircraft to minimise disruption for its own passengers.

The industrial action is set to affect all flights using French airspace, leading to wider cancellations and delays across Europe and the wider world.

Ryanair said its cancellations, covering both days, would hit services to and from France, and also flights over the country to destinations such as the UK, Greece, Spain and Ireland.

More from Money

Group chief executive Michael O’Leary has campaigned for a European Union-led shake-up of air traffic control services in a bid to prevent such disruptive strikes, which have proved common in recent years.

He described the latest action as “recreational”.

Michael O'Leary. Pic: Reuters
Image:
Michael O’Leary. Pic: Reuters

“Once again, European families are held to ransom by French air traffic controllers going on strike,” he said.

“It is not acceptable that overflights over French airspace en route to their destination are being cancelled/delayed as a result of yet another French ATC strike.

“It makes no sense and is abundantly unfair on EU passengers and families going on holidays.”

Ryanair is demanding the EU ensure that air traffic services are fully staffed for the first wave of daily departures, as well as to protect overflights during national strikes.

“These two splendid reforms would eliminate 90% of all ATC delays and cancellations, and protect EU passengers from these repeated and avoidable ATC disruptions due to yet another French ATC strike,” Mr O’Leary added.

Continue Reading

Trending