Business groups have expressed disappointment with the recently announced National Insurance and dividend tax increases, describing the government’s decision as a blow to small businesses and the country’s economic prospects.
On 7 September, Boris Johnson announced that National Insurance contributions for employees and employers will rise by 1.25 percentage points from April 2022 in order to fund health and social care. In addition, the Prime Minister revealed that tax on share dividends will also increase by 1.25 percentage points.
The Federation of Small Businesses (FSB) said the tax hikes mark ‘an anti-jobs, anti-small business, anti-start-up manifesto breach’ and that the move could potentially cause 50,000 more people to be left out of work. The British Chambers of Commerce (BCC) warned the move could derail the UK’s economic recovery.
Reacting to the announcement, BCC Head of Economics, Suren Thiru 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. 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.”
The latest Lloyds Bank Business Barometer shows confidence among UK companies is running at its highest level in more than four years.
Data from the bank’s August survey reported overall business confidence at +36%, a six-point increase from the previous month and the highest figure since April 2017. This surge in confidence was driven by improvements in firms’ trading prospects and expectations of stronger growth in the year ahead.
Commenting on the findings, the bank’s Senior Economist, Hann-Ju Ho said, “Business confidence reaching its highest level in over four years tells a positive story about the country’s economic recovery. Staff shortages remain a challenge but as the economy moves back towards prepandemic levels, we can be optimistic that the momentum for business confidence and economic optimism can be sustained in the months ahead.”
Another survey published last month also highlighted the issue of staff shortages. The IHS Markit/CIPS composite Purchasing Managers’ Index fell to a six-month low of 54.8 in August, with respondents reporting
constraints on business activity due to shortages of staff and raw materials. While any value above 50 still represents growth, the latest reading does suggest the UK recovery lost some momentum over the summer months.
New research published by the Resolution Foundation, suggests the jobs market is facing a period of ‘huge uncertainty’ as the furlough scheme ends, with hiring at record highs but unemployment set to rise.
The think tank’s latest Labour Market Outlook considers what the end of the Job Retention Scheme could mean for the labour market. While it notes that the overwhelming success of furlough has prevented a surge in joblessness, it warned that around 900,000 people could still be on the scheme when it ends on 30 September.
As a result, the Foundation believes there is ‘huge uncertainty’ about what might happen next and argues that employment support schemes will have a vital role in protecting vulnerable groups. With older workers the most likely to still be on furlough, it suggests the Restart scheme will be particularly important.
The Confederation of British Industry has also highlighted current uncertainties, warning that staff shortages could continue for another two years. Although the business group acknowledged the end of furlough would bring some people back into the labour market, it said this would not be a ‘panacea’ that will ‘magically fill labour supply gaps.’
The FSB is urging the government to significantly reform the business rates system which it describes as ‘regressive and outdated.’
In a letter sent to the government ahead of its business rates review this autumn, the FSB highlighted a number of positive steps that could be taken to improve the system. In particular, it said small firms should not be penalised with a higher business rates bill for investments aimed at improving sustainability or the working conditions of employees.
The FSB submission also encouraged policymakers to accelerate reforms aimed at removing some of the country’s smallest businesses from the system entirely and suggested all childcare providers across England should be granted rates relief to bring support in line with that provided in Wales and Scotland.
FSB National Chair, Mike Cherry said, “This is a levy that hurts small firms trying to do the right thing: if you put solar panels on the roof to aid your transition to net zero or install ventilation to support the wellbeing of your staff, the Valuation Office Agency will advise your local authority that you should be paying more in business rates. We should be aiming to take more small firms out of the system altogether, not least our childcare providers.”
A survey conducted by XpertHR has highlighted a shift in the way employers recognise long-serving staff, with firms increasingly offering monetary rewards rather than carriage clocks or lunch with the CEO.
Staff now typically remain with an employer for significantly less time than was previously the case. According to the latest OECD figures, UK employees spend an average of 8.6 years in a role, while ONS data shows under 35s were the most likely to change role between 2000 and 2018.
XpertHR’s research, however, shows firms are still keen to recognise and reward loyalty with two-thirds of organisations offering long-service awards. Five years was the most popular timeframe for recognising loyal employees with just over four in ten organisations acknowledging this milestone, while three out of ten employers said they wait for ten years’ service and one in eight requires 25 years.
The survey also found that gift vouchers, worth an average of £100 for five years’ service, are now the most popular method of reward. There was, however, a great deal of variation in the size of awards across organisations, with £5,000 after a decade of service the most generous payment given by any of the surveyed employers.
BUDGET DATE CONFIRMED
Chancellor Rishi Sunak has confirmed that the Autumn Budget will take place on Wednesday 27 October. It will be Mr Sunak’s third Budget and will be delivered alongside the conclusions of the 2021 Spending Review, which will set out how much money government departments can expect to receive over the next three years.
CONTACTLESS LIMIT GOING UP
UK Finance has confirmed that the national roll-out of the new spending limit for contactless card payments will begin on 15 October 2021. The decision to raise the limit from £45 to £100 was made by HM Treasury and the Financial Conduct Authority after a public consultation and discussions with the retail and banking sectors. It follows on from last April’s successful increase in the limit from £30 to £45.
BEST PLACE TO START A BUSINESS
Research conducted by e-money platform Tide, has ranked the UK as the best country in Europe to start a business. The study analysed a range of national performance indicators including GDP, unemployment rate and the practicalities of starting a company across 28 European countries. The UK retained its overall spot at the top of the table, as well as heading the list of countries with the lowest cost of starting a business.
As a growing proportion of the workforce returns to the office, there are fears that more people will once again begin to suffer the psychological effects of imposter syndrome.
Studies have shown that over threequarters of all UK adults experience imposter syndrome at some point in their lives, with office workers among the most likely sufferers. Imposter syndrome is essentially an irrational fear of being ‘found out’ or exposed as a fraud by colleagues despite evidence to the contrary. Common signs of imposter syndrome include:
• Bouts of self-doubt
• An inability to accurately assess your competence and skills
• Putting any successes down to external factors
• Being overly critical of your job performance
• A fear of disappointing.
In 2020, a study by the University of Nottingham found that working from home can mitigate these feelings, with the research reporting a 57% decline in feelings of imposter syndrome compared to the previous year. A return to the office could therefore see the problem flare up again for many workers.
HR experts, however, have put forward a number of strategies to help people overcome imposter syndrome:
• Congratulate yourself on your achievements when you perform well
• Focus on facts and don’t allow emotions to override logic
• Never make assumptions about how colleagues feel about you
• Don’t put too much pressure on yourself when completing new tasks
• Talk to colleagues that you feel comfortable opening up to at work.
HMRC recently published some of the most absurd excuses given by employers for not paying their employees the National Minimum Wage (NMW).
The list of excuses includes:
“The employee was not a good worker, so I did not think they deserved to be paid the NMW”
“My employee is still learning so they are not entitled to the NMW”
“The NMW does not apply to my business”
“I have an agreement with my workers that I will not pay them the NMW”
“My workers like to think of themselves as being self employed and the NMW does not apply to people who work for themselves.”
Steve Timewell, Director of Individuals and Small Business Compliance at HMRC, said, “The majority of UK employers pay their workers at least the NMW, but this list shows some of the excuses provided to our enforcement officers by less scrupulous businesses. Being underpaid is no joke for workers, so we always apply the law and take action.”