Family firms slam the brakes on hiring as Labour tax hikes cost jobs

Family firms have slammed the brakes on hiring as the cost of employment soars under Labour.

In a damning report, campaign group Family Business UK (FBUK) warned the national insurance tax raid and inflation-busting hikes in the minimum wage are hitting recruitment among Britain’s five million family-owned enterprises.

It found concerns about wages and other employment costs are by far ‘the biggest barriers to hiring new employees’ – outstripping the impact of war in the Middle East.

Family firms have also been battered by Labour’s inheritance tax raid that threatens to destroy generations of hard work.

With unemployment heading to its highest level in over a decade – and fears mounting a ‘lost generation’ of young jobless workers face a lifetime on benefits – business leaders called for ‘a fairer and simpler tax system’ to boost job creation.

Neil Davy, chief executive of FBUK, said: ‘Family businesses have been building Britain for generations but, right now, they feel stuck in limbo being squeezed on all sides by the permanently higher costs of employing people, and temporary cost increases from ongoing geopolitical uncertainty.

‘Family firms remain eager to grow employment, but cost and uncertainty are forcing them to make unpalatable choices – to cut back on recruitment more than they would like and, in some cases, reduce headcount.

‘If we are to reverse this situation and allow businesses to create the opportunities workers need there must be a renewed focus on reducing the burden of national insurance contributions along with careful management of the national minimum and living wages.’

In the FBUK report, 40 per cent of family businesses said ‘high wage expectations’ were ‘the biggest barrier to hiring new employees’.

Employment costs were cited by 37 per cent of firms while 25 per cent pointed to a ‘lack of skilled candidates’.

Around a fifth, or 22 per cent, said they have delayed hiring and expansion plans because of global instability as war rages in the Middle East.

At the same time, some 51 per cent of family firms said they will be hit by the introduction of 20 per cent death duties on assets worth over £2.5million in April.

‘Just when growing the UK economy and supporting British enterprise should be the Government’s priority, this specific tax policy imposed on British family businesses is achieving the opposite – forcing them to look inwards rather than focus on growing their business and creating jobs across the country,’ said Davy.

‘Family businesses are the lifeblood of local economies across the country and are critically important to thriving communities. With the Budget just five months away, the Government must create a fairer – and simpler – tax system that supports family businesses and unlocks their potential to deliver the increased opportunities and economic growth our country needs.’