Darlington businesses owners: Budget a 'nail in the coffin'

Multiple small business owners in Darlington told The Northern Echo they believe they will be negatively affected by hikes in national minimum wage and national insurance which were unveiled by the government today.

In the first Labour budget in 14 years, Chancellor Rachel Reeves confirmed that the rate of employers’ national insurance (NI) will rise by 1.2 percentage points, from 13.8 per cent to 15 per cent from April next year.

The secondary threshold – meaning the level at which employers start paying the tax on each employee’s salary – will also be reduced from £9,100 a year to £5,000.

Ms Reeves said the measure would raise £25 billion per year until the end of its forecast period.

“I know this is a difficult choice,” Ms Reeves said, adding: “I do not take this decision lightly.

“We are asking business to contribute more, and I know that there will be impacts of this measure felt beyond businesses.”

Businesses will also bear the brunt of a 6.7 per cent increase in the national minimum wage to £12.21 an hour next year.

Ms Reeves also announced that the small business multiplier - a tax rate used to calculate bills for non-domestic properties - will freeze for a further year. This will save the average shop about £11,000, according to the commercial real estate intelligence firm Altus Group

For small businesses across Darlington - these announcements were not taken well.

Aimee and Richard Bland, aged 39 and 45, have been based at Queen Street Shopping Centre for two years running their play café CuriosiTeas.

The pair recently revealed their struggle to stay open as the cost of living crisis saw them receive a whopping £10,000 electricity bill as they grapple with the choice of whether to stay open or close for good.

Richard & Aimee Bland owners of CuriosiTeas Play-Cafe (Image: SARAH CALDECOTT) For them, the Budget was not encouraging.

"From our point of view, this is just another nail in the coffin," said Richard.

"This is another justification for us to shut up shop and walk away. There are no incentives for small businesses like ours to carry on.

"We are providing a great service for the town, people love us. The government just doesn't seem to buy into small businesses at all. What's the point in running a business?

"We are not the only ones who will be in this position, others will be feeling the pinch. I do think that they are giving with one hand and taking with another."

Bobby B's Baby Boutique. (Image: NORTHERN ECHO) Rosann Sanderson, 29, owns Bobby B's Baby Boutique on Bondgate. For her, any reduction on business rates would be positive but a minimum wage rise wouldn't necessarily support working people.

"If we didn't benefit from business rates I don't think we or others would survive around here. People can't afford to pay full rates any more. I'd question whether it was worth going on.

"I think the minimum wage going up is good but I believe the only reason they are doing it is so people will be paying more tax.

"I think they are doing it for selfish reasons - I don't think they are doing it to support working people. They are giving it with one hand and taking it out with another."

Business owners Lorraine and Alistair Dunn, 71 and 73, have only been based at their unit, Woodland Creations for three weeks. 

Lorraine Dunn, 71. (Image: NORTHERN ECHO) They were planning on taking on new staff next year - but this budget may force them to re-think.

Alistair said: "I believe that they are going against what they promised. I am ashamed to say I voted for Labour. These increases are going to really hit small businesses and us, the employer.

"It's going to impact hotels and restaurants, people who have multiple staff. They will shut down because they cannot afford national insurance.

"I can see this backfiring. The government want to make money and fill in gaps but all they will do is make less because businesses will close.

"It is going to make us think: do we continue? Are we going to have to manage on our own and not take on staff?"

Joseph Baggaley, 33, who runs Earth Warriors on Skinnergate, said he felt slightly confused by the budget and admitted he would have to take a closer look.

Earth Warriors, Darlington. (Image: NORTHERN ECHO) "There are some things in the budget which seem like she's contradicting herself and they cancel each other out.

"I think some things will balance each other out - specifically business rates. I was more thinking of my old employer which was a family run store.

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"They would have to pay more in national insurance but get relief with business rates. I can imagine that the rise in national minimum wage would affect them negatively.

"In my head, I think they have tried to give with one hand and take with the other.

"They have hopefully tried to find the balance where they figure out there will be more employers paying national insurance but if they are a smaller business they are getting relief."

Lola McEvoy, MP for Darlington, defended the measures introduced in the Budget:

She said: "The Tories’ £22bn black hole has left us with some tough decisions to ensure the much-needed investment in our NHS and public services and get Britain back on the path to prosperity.

"However, by more than doubling the Employment Allowance we have taken action to ensure that the smallest businesses are protected and those with the broadest shoulders bear the largest burden.

"As a result of these changes, 850,000 employers will not pay any national insurance contributions whatsoever next year, and over one million will pay the same or less than they did previously.

"In addition, the significant increase in the national living wage will ensure that more money is in people’s pockets on the high streets - great news for our local businesses."