Business owner from Norfolk raises concerns about cut to national insurance rate
The main rate of national insurance has been cut by two percent, from 12% to 10%, as promised in the Government's Autumn Statement
Last updated 6th Jan 2024
A business owner in Norfolk is telling us that today's cut in National Insurance needs to be the start wider of wider support for small businesses here.
It's as the main rate of national insurance has been cut by two percent, from 12% to 10%, as was promised in the Government's Autumn Statement.
Chancellor Jeremy Hunt said the pre-election cut means families with two earners are nearly a thousand pounds better off.
Ministers have previously said cutting the main rate for employees is a tax cut worth £450 for the average employee on £35,400 in 2024/25.
Prime Minister Rishi Sunak did raise the prospect of further tax cuts earlier this week, when he said he would "keep cutting people's taxes".
"I don't think it goes far enough"
Eric Snaith owns Titchwell Manor Hotel and two food businesses in Norfolk:
"There is a little bit of a bonus for the staff with this. Any kind of assistance is good but I don't think it goes far enough and won't have as big of an impact as we would hope. The average wage in hospitality is sitting just above minimum wage.
"If the staff are happy with their pay and in their job that makes my job so much easier. More support on power and food inflation would be ideal. As a sector it's really hard going and that then pushes onto the staff"
"It made a real difference"
"A cut to VAT would be ideal. We noticed that when it was put in place during Covid that it made a real difference. I feel that if we in hospitality are making a bit more money they are going to invest that into their businesses and pay their staff more.
"The vast majority are struggling to make ends meet and they will then naturally cut back on things like going out for a meal or going for a few nights out in Norfolk"
"Really important in a cost-of-living crisis"
Mr Hunt said: "Today's cut in national insurance by 2% means that a typical family with two earners will be nearly a thousand pounds better off this year.
"That is really important in a cost-of-living crisis where people have been feeling real pressure on family budgets, but also it rewards work, it'll bring more people into the labour force and that is good for growing the economy."
"It's the start of a process, as Chancellor if I can afford to go further I will, I don't yet know if I can.
"But we want to do this because it helps families, it also helps to grow the economy, and we believe that a lightly taxed economy will grow faster and in the end that'll mean more money for public services like the NHS."
Following the autumn statement in November, the Government has faced pressure by Tory MPs to go further and cut income tax or inheritance tax.
The spring budget on March the 6th could be Mr Hunt's last chance to introduce major tax and spending changes before the next general election.
Labour has said that despite the cuts, income tax and national insurance thresholds, which have been frozen since 2021, mean that many families have been drawn into higher tax bands.
Shadow chancellor Rachel Reeves said: "Under Rishi Sunak's raw deal, for every extra £10 people are paying in tax they are only getting £2 back."
Meanwhile the Liberal Democrats are calling for a cost-of-living rescue package for the "squeezed middle".