Firms 'holding back' on new jobs ahead of Budget

Some businesses are calling for the costs of employing staff to be brought down in the Budget on Wednesday.

A publisher from Tavistock, Devon, said he was "holding back" from filling two new positions at his firm because of the cost of taking on new employees.

At the Devon Business Show some firms said they had been struggling for the past two years to deal with the increases in employers' National Insurance contributions introduced in 2024, while also coping with increases in the National Minimum Wage.

Chancellor John Healey will deliver his first Budget on Wednesday but has refused to rule out tax increases after acknowledging government borrowing costs are at "historic highs".

Michelle Bunker, from WGP Maintenance, in Plymouth, said she had one clear message for the chancellor: "I want to see National Insurance contributions starting to go down."

Tim Randell, who runs Links Publishing, said changes to government policy would allow him to employ more people.

He said: "All we've had for the last two Budgets is more tax, more expense, the living wage, and all those things mean that people like me are not employing the young.

"I have two positions that I could fill, want to fill, want to expand and grow my business, but I'm holding back because of the employment costs."

In the 2024 Budget, Rachel Reeves announced companies would have to pay National Insurance at 15% on salaries above £5,000 from April 2025, up from 13.8% on salaries above £9,100.

The legal minimum wage for over-21s also rose from £11.44 to £12.21 per hour from April 2025.

Kevin Miller, the boss of Apex HR, in Plymouth, said small businesses were "the backbone of the whole economy" and needed help.

He said: "We need to reduce the cost of employing people because we're all passionate about really wanting to build this economy and grow it - so help us out with some tax relief please..."

The cost of living crisis is affecting charities as much as businesses, according to Elsbeth Hallam, from Plymouth-based Hugs Children's Cancer Charity, which supports families with children with cancer.

She said: "People are definitely being tighter on what they're spending their money on.

"For us, obviously it does have a run-on effect then on what we can raise and how many families we can support."

Tens of thousands of people are employed in hospitality and catering in Devon and hotel bosses said the industry had been going through a tough time.

People working in hospitality - spearheaded by celebrity chef Tom Kerridge - have long been campaigning for a reduction in VAT for pubs and restaurants from 20% to 10%.

Melanie Williams, events manager at the Duke of Cornwall Hotel, in Plymouth, said: "I think people's financial pockets are strained and any support we can be given from the government within the budget has got to benefit everybody in the industry - VAT perhaps to be revisited again."

Pete Adams, general manager at the Moxy Hotel, in Plymouth, joined the call for a cut to VAT for the hospitality sector.

He said: "That would allow us to pass some of those savings on to the customer.

"That will then hopefully increase more customers into our businesses and extra spending and that'll give the Treasury almost as much money as before."

The Devon Business Show was hosted by Devon Chamber of Commerce at the Plymouth Life Centre.

Helen Wylde-Archibald, CEO of Devon Chamber of Commerce, said businesses in the county were "planning for a better future".

She said: "I think what we just need is that soft touch with the Budget so that businesses get the chance to grow and I think Devon will be right at the front of the pack."

The government insisted it was "on the side of business" and said easing the cost of doing business was one of the chancellor's five priorities.

A spokesperson for HM Treasury said: "The chancellor is giving firms the breathing space to invest and grow, with business rates cuts, a cap on corporation tax, £4.3 billion of support to limit bill rises, and employer National Insurance contributions relief when hiring under-21s and apprentices under 25.

"As has always been the case, decisions on tax are a matter for the chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals."

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