Darlington small business owners' plea ahead of budget

Small businesses in Darlington town centre have urged the government to "support them or lose them" ahead of the budget as the prospect of tax rises on national insurance could threaten their future.

Chancellor Rachel Reeves is expected tomorrow (October 30) to increase employer contributions to national insurance by at least one percentage point as the Government seeks to raise funds without hiking taxes on “working people”, as per its manifesto promise.

However, this has left many small businesses across the town concerned about what it could mean for them and their future as they urge the government not to leave them behind.

Woodland Creations is the newest addition to Queen Street Shopping Centre. Owners Lorraine and Alistair Dunn, 71 and 73, have only been based at their unit for three weeks. 

Despite business going well so far, their plans to take on extra staff in the new year could be in jeopardy should wages and national insurance expenses rise.

Lorraine Dunn, 71. (Image: NORTHERN ECHO) Lorraine said: "Next year we were planning to take on more employees - any rise in national insurance or minimum wage would affect us. It would have a massive impact.

"I don't think it's fair that this burden is passed to us. There should be a threshold that stops small businesses from getting this rise. It's ridiculous.

The pair then talked politics and explained that despite being Labour voters, they have been disappointed by the government so far.

Lorraine added: "Our town centre keeps getting more empty shops. "You need small businesses and if you go through Queen Street there are so many here. But how can we keep up? How can we function?

Queen Street Shopping Centre. (Image: NORTHERN ECHO)

"We lost House of Zahna, Studio 11, Wilko - if we keep going like this, we will have nothing left."

Alistair added: "There are a lot of small businesses in Darlington - if they hit us, we are all going to shut."

Just minutes away is Bobby B's Baby Boutique on Bondgate - which sells a variety of baby grows and outfits for special occasions.

Rosann Sanderson, 29, the owner, believes any rise will be an abrupt and shocking increase for businesses who will have to adjust to cope.

She told The Northern Echo: "The government wants towns to thrive - but the very businesses they forget about are the smallest ones. Business rates are expensive and affect us too.

Bobby B's Baby Boutique. (Image: NORTHERN ECHO) "When the government think of small businesses they think that there aren't many employees, but just because they are 'small' they can have quite a lot.

"It all has a knock-on effect - national insurance, minimum wage. To just say overnight that it's going up? That is a lot of money, especially for small businesses."

Down on Tubwell Row is Rainbow Scoops - an ice cream parlour that just last year set up a GoFundMe in a bid to save his business as the cost of living crisis continued to take its toll.

Arran Last, the owner, believed that any changes would impact his business - but not in the way many people automatically think.

He said: "Apart from stock, salary is usually the next biggest expense for businesses. I've talked to quite a few small business owners around here about this.

Arran Last, owner of Rainbow Scoops in Darlington. "What will happen is that the minimum wage will be increased, but I know as an owner how much I can spend on wages, so I will budget for that.

"I'll just have to give people fewer hours. So, my expenses won't change but workers will earn less. Businesses will have to do what they can afford. There will be fewer hands, but bills stay the same." 

For Earth Warriors on Skinnergate, trade has been on the up, despite a presumption that footfall would go down.

"From taking over in 2022 we've seen an increase in trade of up to 40%. I think for other businesses it will make a difference unless it is something they have priced in and prepared for.

"Unless their trade is suffering in other ways then I can't see it making that much difference in the long term for them financially."

However, business owners in Darlington are not the only ones feeling concerned about what the budget will bring.

Steve Luke, 56, owns a paraplanning business in the financial services sector, employing nine people including himself, and said he is “really anxious” ahead of the Budget.

The business owner, based in Newcastle, told the PA news agency: “I’m seriously concerned that if the Budget is as bad as I’m expecting then we may have to reduce the workforce from nine to seven or eight.”

Mr Luke said he is particularly concerned Labour will not view him as a “working person”, after Sir Keir Starmer told Sky News he does not consider people who have an income from assets such as shares of property to be working people – a suggestion Downing Street later rowed back on.

“Myself and my business partner take a small salary then pay ourselves a dividend, as our business income fluctuates so much we can’t guarantee to cover a fixed salary each month and take dividends as and when it is appropriate,” said Mr Luke.

“The potential increase in employer national insurance is also going to cut right into our very small margins, which is why we will possibly end up having to let one or two people go.”

Farmer and landlord Richard Payne, 61, said he is “extremely nervous” ahead of the Budget because he is worried about taxation of his profits, inheritance tax and business property relief.

The farmer, based in Somerset, owns around 500 acres of land and rents an additional 150-200 acres to farm wheat, barley, oilseed rape and canola.

Mr Payne told PA: “It would look like SMEs are going to be clobbered hard.

“Whilst I’m probably not going to be clobbered hard on national insurance contributions, because we don’t employ a huge number of people… I’m more worried about taxation on profit if we make any, and also, in my case, losing agricultural property leave or business property relief on our assets.”

Mr Payne employs one person part-time, owns several business units on the farm, and rents out two cottages.

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“I feel very, very nervous that I’m going to be clobbered for a job that really hardly pays me, but I do it because I don’t know how to do anything else and I’m really nervous about what effect this Budget is going to have on SMEs and me personally,” he said.

Specifically citing a possible increase in inheritance tax, the farmer said: “Let’s say my son wanted to go into farming and carry on the business – if he had to raise inheritance tax on the land, he’d have to sell 40% of the farm, and then what would be left.

“That really worries me, because I don’t believe they understand farming and they don’t understand food production. They just believe it all appears on shop shelves, supermarket shelves, by magic.”