BusinessCloud joined forces with MHA and Napthens and several Liverpool businesses to discuss the impact of Rachel Reeves’ Autumn Statement.
The main National Insurance (NIC) change for employers from April 2025 is an increase in the rate of employer NICs from 13.8 per cent to 15 per cent.
The move is expected to cost businesses an additional £926 per year for each employee earning £35,000.
However, controversial changes to Inheritance Tax have also had huge implications to family-run businesses and led to angry protests.
We’ve been hammered by these extra taxes
Madina Barker is the managing director of robotic integration company CNC Robotics and has previously taken part in a roundtable discussion with Rachel Reeves.
She said: “Like everyone else around the room it’s going to be a challenging period. I don’t know if we were blindsided by the Budget but the initial message from Rachel Reeves was ‘invest, invest, invest’ and then you get absolutely hammered by these extra taxes, NI contributions etc.
“But a lot of us have been in business for quite a while. We’re 15 years down the line and it’s now time to look at your business model. Is what you’re doing profitable going forward? Is it going work going forward? Do you need to pivot?”
NI rise will cost us £96k – but we’ve identified savings of £195k
Stephen Smullen is the managing director of PB Group, which is turning over £30m with 44 staff.
He said: “We’re expanding but we are experiencing the same problems that everybody else is. We can’t change the Government but I’m solutions-based. By looking at solutions you’re not dwelling on the problem. We can’t change what the Government does.”
Although the NI rise will cost the business an extra £96k, Smullen said they’ve identified potential cost savings of £195k.
“It involved saving pennies on materials that we use when we’re picking, packing and shipping,” he said. “Sometimes with business, especially me, I’ve not looked at the pennies for a while because we are so busy. There are definitely savings that we can make that won’t impact staff.”
Resilience is key to longevity in business
Andrew Allen is the non-executive chairman of tech firm Aabyss, having previously worked as CEO for more than seven years.
He said: “The impact on our business is the same as everybody else really. I’m old enough, and come from an entrepreneurial family, so have seen periods of boom and bust in the economy for a long time now. Maybe because I’m a bit older I’m more jaded to it.
“When people talk about the ‘new normal’, I think this is the new normal with the geopolitical situation and our economy right now. In periods of boom it hides organisations that aren’t very good, robust and have controls. Resilience is the platform to a good sustainable business and not take things for granted.”
Don’t leave your values behind
Paul Corcoran is the CEO of Agent, which was one of the first agencies in the UK to fully adopt the four-day working week.
Recently included in BusinessCloud’s Northern Leaders 2024 he said: “This roundtable has been really useful. Being a business leader is a lonely space. We’re all looking at our own businesses and ways in which we can continue to remain profitable. That said we’re all going to have to look at ways we can reduce costs and increase revenue coming in.
“The other important thing is not to leave our values behind and remember why we became strong, well respected businesses and using that energy to turbocharge us moving forward and not letting our principles be left behind.”
‘We have to suck it up and find a way through it’
Lorna Davidson is the CEO of flexible worker recruitment platform RedWigWam, which connects thousands of businesses with vetted talent.
She said: “From my perspective I’ve enjoyed hearing that everybody else is in the same boat and is facing the same things. I know you know it but actually hearing everybody else has helped me understand it.
“My only advice is you just have to suck it up. We have to find a way through it. We should go to our community of other business people and try and help. It’s about thinking about it slightly differently and lifting the head up out of the day-to-day business and recognising that will affect how business grows but also the people who work in the businesses.”
Technology can help clients manage cost
Michael Heverin, is the co-founder and CEO of EdTech SupplyWell and said it was ‘comforting’ to hear everyone is in the same boat.
He said: “The impact that it has is very real to everybody. From our perspective we have to understand that schools are going to see their costs increase but are not going to be funded very differently.
“From where we sit we have to be able to help those multi academy trusts be able to manage that difficulty in a better way. From our perspective that enables us to use our technologies and software solutions to give the opportunities to manage their workforce more effectively to reduce the reliance on reactive measures of traditional agencies where they do see costs become very unpredictable.”
Our tech solutions can help reduce overheads
Dean Ward is the co-founder of Evoke Creative, a Wirral-based manufacturer and installer of digital kiosks and signs. They use a significant number of contract staff to be able to flex up and down.
MHA and Napthens join Liverpool businesses at BusinessCloud’s latest roundtable
He said: “We’ve going round the room and everyone is echoing similar things about NI. From a business perspective we’re trying to capitalise on it by selling our solutions to businesses that are facing difficulties with operational overheads and things. Whether it’s a public service, a hotel or a retailer, by using our technology they’re able to become more profitable.”
Budget has created artificial activity
Rob Richardson is a corporate finance partner at MHA and said the Autumn Statement has driven a lot of ‘artificial activity’.
He said: “There have been lots of deals being done because of fears around tax rates. Once that settles down it will be interesting to see what the market will be like.
“Listening to everybody today it sounds like there’s going to continue to be lots of opportunities out there and lots of people wanting to do deals. It will be those resilient businesses that are the ones that will flourish.
“I was talking to a software development company and they were saying they were managing to let go of developers and replace them with AI solutions and other solutions. It’s quicker, it’s more efficient and ultimately it’s more profitable. Businesses will develop but I suppose it’s at what cost.”
Roll with the punches
Nicola Docking is the managing director of leading marketing agency Poke and warned it’s the ‘nice to have’ perks that could be lost as employers tighten their belts.
She said: “It’s come at a time where it felt like employees were starting to be really respected and treated in a different way and there was an onus on businesses to go that extra step for your staff.
“The challenge is with this kind of increase how do you carry on doing that and make it part of your business approach? I hope people do find a way to carry on doing that. We’re at a size where it’s manageable. You got to kind of roll with the punches. It’s the nature of running a business, you can’t predict what’s going to happen and you have to adapt.”
Technology can offset National Insurance rise
Scott Robertson is the co-founder of Haulage Hub, which has created a tech platform to tackle inefficiencies in the UK haulage industry.
He said: “It’s been really interesting hearing everyone’s views from different types of businesses all talking about the impact that NI has really had on businesses and the cost of it. It all feels very real.
“What it’s also done has reaffirmed that there are possibilities out there to negate some of those costs with the use of technology. There are alternative ways to grow other than heading headcount.”
Control the controllables
Kieran Donovan is a corporate partner and head of the Liverpool office at Napthens.
He said: “Control the controllable. There’s a lot of white noise out there that will distract us in business. We run a business with 300 staff and six locations. We’re fortunate to work with clients across many different sectors. The common themes we’ve discussed affect us in business.
“Drive those operational efficiencies. Make sure your key people are locked in. Make sure your brand and your IP is protected. Make sure your contracts are watertight. Make sure you’re got funders who will support you when you hit the inevitable bumps in the road. For me it’s all about culture over strategy. Businesses are resilient and it’s important to maintain that optimism.”
Government needs to be honest
Gareth McIntegart is an M&A corporate lawyer at Napthens and said he hoped the Government would be honest if growth slowed.
“People will find a way through,” he said. “The question is at what cost? What I think will happen in the next year, or two or three is we’ll look back and the growth isn’t there and guess what, it won’t be the Government’s fault, it will be what’s gone on in the wider world and what’s gone in Ukraine and, dare I say it, in Russia.
“I hope we get the growth but if we don’t get the growth I hope the Government is quick to say the reason we didn’t get it is because of things they didn’t do. You can only squeeze the pips so far.”
Government is trying to fill £22bn black hole
Michael Spencer is a tax partner at MHA and said: “Clearly the Government’s focus was on growth and the Budget hasn’t materialised with that.
“I think it’s a hardening of the £22bn black hole they keep talking about. There’s a hardening in approach from HMRC about making sure they maximise their tax take.
“We’re talking about National Insurance. We should also talk about the fact that it has an impact on employees. There’s also the Capital Tax Relief drawbacks that will have an impact on all of you, particularly around protection. Today there’s no Inheritance Tax on your businesses but in a year’s time there will be.”