BUSINESS leaders in Hampshire have responded to plans to fund social care by increasing National Insurance contributions.

The new health and social care levy will be based on increased national insurance contributions and caps the total lifetime cost of care in England at £86,000 from October 2023.

Responding to a 1.25 per cent increase in national insurance contributions alongside a 1.25% increase in dividend taxation, Federation of Small Businesses (FSB) development manager for Hampshire, Dorset and Isle of Wight, Nicola Bailey said: “These hikes will have business owners and sole traders feeling demoralised at the point when they’re trying to recover from the most difficult 18 months of their professional lives.

“For those thinking about starting up, they send completely the wrong message.

“Business owners who have done all they can to retain and support their staff during the pandemic are now being punished for that loyalty with an £11bn increase in NICs, which essentially serve as a jobs tax.

“This regressive levy hits employers and sole traders without meaningful regard for how their business is performing. And this increase will stifle recruitment, investment and efforts to upskill and improve productivity in the years ahead.

“At the same time those running companies, many of whom were left out of pandemic support measures, face a fresh assault on dividend revenue.

“It’s extremely disappointing to see the Government undermining the good work it did last year in raising the Employment Allowance to provide some protection for small employers.

“Instead of breaking manifesto promises, we had hoped this administration – which has repeatedly pledged its support for small enterprises – would build on that progress against a backdrop of spiralling input prices, skills shortages, supply chain disruption, the reintroduction of business rates and emergency loan repayments.

“This move marks an anti-jobs, anti-small business, anti-start up manifesto breach. The Government should now increase the Employment Allowance to mitigate the damaging impacts of these hikes on the small firms that make-up 99% of our business community.”

Hampshire Chamber board director, Peter Taylor said: “The need for well-funded health and social care provision is recognised.

“However, asking business to contribute through higher National Insurance contributions now fails to take account of the pressing need for business growth to provide economic stability and revenues for the public purse in the longer term.

“We are at a critical point in our emergence from the pandemic. Businesses are seeking support and encouragement to play their part in the recovery of the economy. Some have built up a significant debt burden and others face the end of government support from the furlough scheme at the end of this month. At a time when we are already seeing higher inflation, supply chain challenges and increasing staff costs in a number of sectors, the planned rise in contributions is an additional outlay which is unlikely to be welcomed by employers.”