‘We will see closures’: The industries hit hardest by national insurance hike

Published

6 months ago

April 5, 2025

admin

The cost of having staff is going up this Sunday as the increase in employers’ national insurance kicks in.

Chancellor Rachel Reeves announced in the October budget employers will have to pay a 15% rate of national insurance contributions (NIC) on their employees from 6 April – up from 13.8%.

She also lowered the threshold at which employers pay NIC from £9,100 a year to £5,000 a year, meaning they start paying at an earlier point on staff salaries.

This is on top of the national minimum wage rising, the business relief rate for hospitality, retail and leisure reducing from 75% to 40% and the rising cost of ingredients and services.

Sky News spoke to people working in some of the industries that will be hardest hit by the rise in NIC: Nurseries, hospitality, retail, small businesses and care.

NURSERIES

Nearly all (96% of 728) nurseries surveyed by the National Day Nurseries Association (NDNA) said they will have no choice but to put up fees because of the NIC rise, leaving parents to pick up the shortfall.

The NDNA has warned nurseries could close due to the rise, with 14% saying their business is at risk, 69% reducing spending on resources and 39% considering offering fewer places with government-funded hours as 92% said they do not cover their costs.

Sarah has two children, with her youngest starting later this month, but they were just informed fees will now be £92 a day – compared with £59 at the same nursery when her eldest started five years ago.

“I’m not sure how we will afford this. Our salaries haven’t increased by 50% during this time,” she said.

“We’re stuck as there aren’t enough nursery spaces in our area, so we will have to struggle.”

Karen Richards, director of the Wolds Childcare group in Nottinghamshire, has started a petition to get the government to exempt private nurseries – the majority of providers – from the NIC changes as she said it is unfair nurseries in schools do not have to pay the NIC.

She told Sky News she will have to find about £183,000 next year to cover the increase across her five nurseries and reducing staff numbers is “not off the table” but it is more likely they will reduce the number of children they have.

Joeli Brearley, founder of the Pregnant Then Screwed campaign group, told Sky News: “Parents are already drowning in childcare costs, and now, thanks to the national insurance hike, nurseries are passing even more fees on to families who simply can’t afford it.

“It’s the same story every time – parents pay the price while the government looks the other way. How exactly are we meant to ‘boost the economy’ when we can’t even afford to go to work?”

Purnima Tanuku, executive chair of the NDNA, said staffing costs make up about 75% of nurseries’ costs and they will have to find £2,600 more per employee to pay for the NIC rise – £47,000 for an average nursery.

“The government says it wants to offer ‘cheaper childcare’ for parents on the one hand but then with the other expects nurseries to absorb the costs of National Insurance Contributions themselves,” she told Sky News.

“High-quality early education and care gives children the best start in life and enables parents to work. The government must invest in this vital infrastructure to make sure nurseries can continue to deliver this social and economic good.”

HOSPITALITY

The hospitality industry has warned of closures, price rises, lack of growth and shorter opening hours.

Dan Brod, co-owner of The Beckford Group, a small southwest England restaurant and country pub/hotel group, said the economic situation now is “much worse” than during COVID.

The group has put plans for two more projects on hold and Mr Brod said the only option is to put up prices, but with the rising supplier costs, wages, business rates and NIC hike they will “stay still” financially.

He told Sky News: “What we’re nervous about is we’re still in the cost of living crisis and even though our places are in very wealthy areas of the country, Wiltshire, Somerset and Bath, people are feeling the situation in their pockets, people are going out less.”

Mr Brod said they are not getting rid of any staff as their business strongly depends on the quality of their hospitality so they are having to make savings elsewhere.

“I’m still optimistic, I still feel that humans need hospitality but we’re not valued as an industry and the social benefit is never taken into account by government.”

Aktar Islam, owner/chef at two Michelin-starred Opheem in Birmingham, said the NIC rise will cost him up to £120,000 more in staff costs a year and to maintain the financial position he is in now they would have to make “another million pounds”.

He got emails from eight suppliers on Thursday saying they were raising their costs, and said he will have to raise prices but is concerned about the impact on diners.

The restaurateur hires four commis chefs to train each year but will not be able to this year, or the next few.

“It’s very short-sighted of the government, you’re not going to grow the economy by taxing hospitality out of existence, these sort of businesses are the lifeblood of our economy,” he said.

“They think if a hospitality business closes another will open but people know it’s tough, why would they want to do that? It’s not going to happen.”

The chef sent hundreds of his “at home” kits to fellow chefs this week for their staff as an acknowledgement of how much of a “s*** show” the situation is – “a little hug from us”.

RETAIL

Some of the UK’s biggest retailers, including Tesco, Boots, Marks & Spencer and Next, wrote to Rachel Reeves after the budget to say the NIC hike would lead to higher consumer prices, smaller pay rises, job cuts and store closures.

The British Retail Consortium (BRC), representing more than 200 major retailers and brands, said the costs are so significant neither small or large retailers will be able to absorb them.

Andrew Bailey, the governor of the Bank of England, told the Treasury committee in November that job losses due to the NIC changes were likely to be higher than the 50,000 forecast by the Office for Budget Responsibility (OBR).

Nick Stowe, chief executive of Monsoon and Accessorize, said retailers had the choice of protecting staff numbers or cancelling investment plans.

He said they were trying to protect staff numbers and would be increasing prices but they would likely have to halt plans to increase store numbers.

Helen Dickinson, head of the BRC, told Sky News the national living wage rise and NIC increase will cost businesses £5bn, adding more than 10% to the cost of hiring someone in an entry-level role.

A further tax on packaging coming in October means retailers will face £7bn in extra costs this year, she said.

“This huge cost burden will undoubtedly reduce investment in stores and jobs and is likely to lead to higher prices,” she added.

SMALL BUSINESSES

A massive 85% of 1,400 small business owners surveyed by the Federation of Small Businesses (FSB) in March reported rising costs compared with the same time last year, with 47% citing tax as the main barrier to growth – the highest level in more than a decade.

Just 8% of those businesses saw an increase in staff numbers over the last quarter, while 21% had to reduce their workforce.

Kate Rumsey, whose family has run Rumsey’s Chocolates in Wendover, Buckinghamshire and Thame, Oxfordshire, for 21 years, said the NIC rise, minimum wage increase and business relief rate reduction will push her staff costs up by 15 to 17% – £70,000 to £80,000 annually.

To offset those costs, she has had to reduce opening hours, including closing on Sundays and bank holidays in one shop for the first time ever, make one person redundant, not replace short-term staff and introduce a hiring freeze.

The soaring price of cocoa has added to her woes and she has had to increase prices by about 10% and will raise them further.

She told Sky News: “We’re very much taking more of a short-term view at the moment, it’s so seasonal in this business so I said to the team we’ll just get through Q1 then re-evaluate.

“I feel this is a bit about the survival of the fittest and many businesses won’t survive.”

Tina McKenzie, policy chair of the FSB, said the NIC rise “holds back growth” and has seen small business confidence drop to its lowest point since the first year of the pandemic.

With the “highest tax burden for 70 years”, she called on the chancellor to introduce a “raft of pro-small business measures” in the autumn budget so it can deliver on its pledge for growth.

She reminded employers they can claim the Employment Allowance, which has doubled after an FSB campaign to take the first £10,500 off an employer’s annual bill.

CARE

The care sector has been warning the government since the October that budget care homes will be forced to close due to the financial pressures the employers’ national insurance rise will place on them.

Care homes receive funding from councils as well as from private fees, but as local authorities feel the squeeze more and more their contributions are not keeping up with rising costs.

The industry has argued without it the NHS would be crippled.

Raj Sehgal, founding director of ArmsCare, a family-run group of six care homes in Norfolk, said the NIC increase means a £360,000 annual impact on the group’s £3.6m payroll.

In an attempt to offset those costs, the group is scrapping staff bonuses and freezing management salaries.

It is also considering reducing day hours, where there are more staff on, so the fewer numbers of night staff work longer hours and with no paid break.

Mr Sehgal said: “But what that does do unfortunately, is impact the quality you’re going to be able to provide, at a time when we need to be improving quality, but something has to give.

“The government just doesn’t seem to understand that the funding needs to be there. You cannot keep enforcing higher costs on businesses and not be able to fund those without actually finding the money from somewhere.”

He said the issue is exacerbated by the fact local authority funding, despite increasing to 5%, will not cover the 10% rise.

“It’s going to be a really, really tough ride. And we are going to see a number of providers close their doors,” he warned.

Nadra Ahmed, executive co-chair of the National Care Association, said those who receive, or are waiting to access, care as well as staff will feel the impact the hardest.

“As providers see further shortfalls in the commissioning of care services, they will start to limit what they can do to ensure their viability or, as a last resort exit the market,” she said.

“This is very short-sighted, with serious consequences, which alludes to the understanding of this government.”

Government decided to ‘wipe the slate clean’

A Treasury spokesperson told Sky News the government is “pro-business” but has “taken the difficult but necessary decisions to wipe the slate clean and properly fund our public services after years of declines”.

“Our budget choices have already delivered an NHS with falling waiting lists, a £3.7bn rescue package for social care, and vital protection for Britain’s small businesses,” they said.

“We’re making tough choices today to secure a better tomorrow through our Plan for Change. By investing in economic growth and early years education while capping corporation tax, we’re putting more money in working people’s pockets and giving every child the best start in life.”

UK

Chancellor admits tax rises and spending cuts considered for budget

Published

6 hours ago

October 15, 2025

admin

Chancellor admits tax rises and spending cuts considered for budget

Rachel Reeves has told Sky News she is looking at both tax rises and spending cuts in the budget, in her first interview since being briefed on the scale of the fiscal black hole she faces.

“Of course, we’re looking at tax and spending as well,” the chancellor said when asked how she would deal with the country’s economic challenges in her 26 November statement.

Politics Hub: Follow latest updates

Ms Reeves was shown the first draft of the Office for Budget Responsibility’s (OBR) report, revealing the size of the black hole she must fill next month, on Friday 3 October.

She has never previously publicly confirmed tax rises are on the cards in the budget, going out of her way to avoid mentioning tax in interviews two weeks ago.

Cabinet ministers had previously indicated they did not expect future spending cuts would be used to ensure the chancellor met her fiscal rules.

Ms Reeves also responded to questions about whether the economy was in a “doom loop” of annual tax rises to fill annual black holes. She appeared to concede she is trapped in such a loop.

Asked if she could promise she won’t allow the economy to get stuck in a doom loop cycle, Ms Reeves replied: “Nobody wants that cycle to end more than I do.”

She said that is why she is trying to grow the economy, and only when pushed a third time did she suggest she “would not use those (doom loop) words” because the UK had the strongest growing economy in the G7 in the first half of this year.

What’s facing Reeves?

Ms Reeves is expected to have to find up to £30bn at the budget to balance the books, after a U-turn on winter fuel and welfare reforms and a big productivity downgrade by the OBR, which means Britain is expected to earn less in future than previously predicted.

Yesterday, the IMF upgraded UK growth projections by 0.1 percentage points to 1.3% of GDP this year – but also trimmed its forecast by 0.1% next year, also putting it at 1.3%.

The UK growth prospects are 0.4 percentage points worse off than the IMF’s projects last autumn. The 1.3% GDP growth would be the second-fastest in the G7, behind the US.

Last night, the chancellor arrived in Washington for the annual IMF and World Bank conference.

‘I won’t duck challenges’

In her Sky News interview, Ms Reeves said multiple challenges meant there was a fresh need to balance the books.

“I was really clear during the general election campaign – and we discussed this many times – that I would always make sure the numbers add up,” she said.

“Challenges are being thrown our way – whether that is the geopolitical uncertainties, the conflicts around the world, the increased tariffs and barriers to trade. And now this (OBR) review is looking at how productive our economy has been in the past and then projecting that forward.”

She was clear that relaxing the fiscal rules (the main one being that from 2029-30, the government’s day-to-day spending needs to rely on taxation alone, not borrowing) was not an option, making tax rises all but inevitable.

“I won’t duck those challenges,” she said.

“Of course, we’re looking at tax and spending as well, but the numbers will always add up with me as chancellor because we saw just three years ago what happens when a government, where the Conservatives, lost control of the public finances: inflation and interest rates went through the roof.”

Blame it on the B word?

Ms Reeves also lay responsibility for the scale of the black hole she’s facing at Brexit, along with austerity and the mini-budget.

This could risk a confrontation with the party’s own voters – one in five (19%) Leave voters backed Labour at the last election, playing a big role in assuring the party’s landslide victory.

The chancellor said: “Austerity, Brexit, and the ongoing impact of Liz Truss’s mini-budget, all of those things have weighed heavily on the UK economy.

“Already, people thought that the UK economy would be 4% smaller because of Brexit.

“Now, of course, we are undoing some of that damage by the deal that we did with the EU earlier this year on food and farming, goods moving between us and the continent, on energy and electricity trading, on an ambitious youth mobility scheme, but there is no doubting that the impact of Brexit is severe and long-lasting.”

UK

UK must prepare for 2C of warming by 2050, government told for first time

Published

9 hours ago

October 15, 2025

admin

UK must prepare for 2C of warming by 2050, government told for first time

Britain must prepare for at least 2C of warming within just 25 years, the government has been advised by its top climate advisers.

That limit is hotter and sooner than most of the previous official advice, and is worse than the 1.5C level most of the world has been trying to stick to.

What is the 1.5C temperature threshold?

Under the 2015 Paris Agreement, countries agreed to try to limit warming to “well below” 2C – and ideally 1.5C.

But with global average temperatures already nearing 1.4C, warnings that we may have blown our chances of staying at 1.5C have been growing.

This new warning from the government’s top advisers, the independent Climate Change Committee (CCC), spells out the risk to the UK in the starkest terms yet.

In a letter today, the CCC said ministers should “at a minimum, prepare the country for the weather extremes that will be experienced if global warming levels reach 2C above pre-industrial levels by 2050”.

It is the first time the committee has recommended such a target, in the hopes of kickstarting efforts to make everything from flooded train tracks to sweltering classrooms more resilient in a hotter world – after years of warnings the country is woefully unprepared.

How climate change affects the UK

The UK is already struggling to cope with the drought, flooding, and heat brought by the current 1.4C – “let alone” what is to come, the advisers said.

Just this year, the country battled the second-worst harvest on record and hottest summer ever, which saw an extra 300 Londoners die.

“Though the change from 1.5C and 2C may sound small, the difference in impacts would be substantial,” CCC adviser Professor Richard Betts told Sky News.

It would mean twice as many people at risk of flooding in some areas, and in southern England, 10 times as many days with a very high risk of wildfires – an emerging risk for Britain.

The experts said the mass building the government is currently pushing, including new nuclear power stations and homes, should even be adaptable for 4C of warming in the future – a level unlikely, but which cannot be ruled out.

Is it too late to stop climate change or limit to 1.5C?

The CCC’s Baroness Brown said in a briefing: “We continue to believe 1.5C is achievable as a long-term goal.

“But clearly the risk it will not be achieved is getting higher, and for risk management we do believe we have to plan for 2C.”

World leaders will discuss their plans to adapt to hotter temperatures at the COP30 climate summit in Brazil in November.

Professor Eric Wolff, who advises the Royal Society, said leaders needed to wake up.

“It is now very challenging even to stay below two degrees,” he told Sky News.

“This is a wake-up call both to continue reducing emissions, but at the same time to prepare our infrastructure and economy for the inevitable climate changes that we are already committed to.”

UK

Premier League players to take knee for first time this season

Published

9 hours ago

October 15, 2025

admin

Premier League players to take knee for first time this season

Premier League chief executive Richard Masters has told Sky News players will take the knee at this weekend’s matches amid ongoing discussions about whether the anti-racism move is still effective.

Captains of the 20 clubs are understood to back the move, although players could decide individually to opt out.

The majority of Women’s Super League teams recently decided against taking the knee in games marking Black History Month, feeling it was no longer meaningful amid a rise in racism.

Sky News revealed last week that online racism cases in English football have quadrupled this season.

And in his exclusive interview, Mr Masters raised concerns about the anonymity of social media users posting abuse and questioned whether identity checks were now necessary.

The Premier League wants platforms to do more to change algorithms to stop players seeing the abuse, and to introduce additional protections to stop it reaching their inboxes.

Football frames racism as a societal problem – requiring education – and Sky News accompanied Mr Masters on a school visit in west London, where the Premier League linked up with Brentford.

Taking the knee

This weekend’s matches will highlight the league’s “No Room for Racism” campaign to combat discrimination and promote equality.

It was in 2020, inspired by the Black Lives Matter movement, that Premier League players started to take the knee before kick-off.

But questions about the effectiveness of the gesture have grown.

“It’s always been their choice,” Mr Masters told Sky News of the players. “It’s never been something that has been forced upon them, either collectively or individually. They had another discussion in the summer.

“They’re going to do it really at the No Room for Racism match rounds. We then decide whether they want to continue or stop. So I think they want to make sure whatever they do, it’s effective.”

‘You’ll be dealt with’

This is a season that began with Bournemouth’s Antoine Semenyo reporting being racially abused at Liverpool, although Mr Masters said “the protocols worked”.

He added: “A lot of our players and participants, managers, referees are subject to abuse, a lot of it racism.

“And we’re trying our best to deal with that, working with our stakeholders and working with the social media companies to try to solve those issues.”

For the league, that is not symptomatic of racist abuse becoming more prevalent in stadiums.

“The Premier League is a very permissive environment,” Mr Masters said. “Very few other places you can come and scream and shout and support your team.

“But I think that fans know where that line is. No violence, no threatened intimidation, and no discrimination. If you do, then you’ll be dealt with.”

Polarised society

The political climate can become problematic, although Mr Masters does not directly reference the summer’s anti-immigration protests when asked.

“Those are political issues, and I think that football’s role is to provide that distraction,” he said.

“Football stands slightly to the side to where society is at the moment, where we are seeing a little bit of polarisation of views. Football, I think, can help in that aspect.”

Social media anonymity

Too many feel they can hurl racist abuse at footballers on social media – and Mr Masters insists the league is “very restless” about eradicating that.

Greater identity checks could help.

Mr Masters said: “There’s an anonymity to it, I think, which, perhaps wrongly, in my view, gives people the view that they can pretty much say and do what they want.

“And I just simply don’t think it should be part of a professional footballer’s life to have to put up with this sort of stuff, which is why we’re taking what action we can.

“Obviously, anything that makes it easier [to find the perpetrators] I would be in principle supportive of, but I think it goes to a lot of other issues around freedom of information.”

AI and algorithms

There is a unit at the Premier League dedicated to pursuing social media firms over racist abuse, which has no complaints publicly about the conduct of the tech giants.

But the league’s director of content protection, Tim Cooper, told Sky News: “The platforms can do more by changing their algorithms, looking at the opting in to see abuse rather than perhaps opting out of seeing it. That would be a step in the right direction.

“And ultimately, it’s for us to keep trying to push cases through and get good real-world deterrent actions, alongside law enforcement and other enforcement bodies around the world.”

There are concerns about the use of AI to create racist images and abusers using phrases or jumbled letters to circumvent algorithms.

“It’s very much gone beyond just a text rant now, which is obviously bad enough, but now we’re seeing that people are using images to create some of the most offensive things that you could imagine,” Mr Cooper said.

“I think video will be something in the future going forward that could be a problem, and we have seen that with deepfakes.”

Instagram owner Meta and Elon Musk‘s X both said they would not provide detail about any work to eradicate racism – declining months of requests for interviews.

Being on social media means children are more aware than ever of incidents of racist abuse across football.

After leading the class in west London, Premier League Primary Stars coordinator Benjamin Abrahams said: “Having to speak to young pupils about things they’ve heard, things they know about, can sometimes be tough.

“But actually, it’s a great chance to speak to them and have those open conversations. To discuss why things are said, why things happen, but [why] it’s not right, and be able to discuss what is correct and what should we all hope for.”