The Eastern Powerhouse provides thought leadership on strategy and policy for regional renewal and national growth. Our primary role as a membership organisation is to represent our members’ views, particularly their challenges in dealing with government policies and how this impacts business performance and growth. It has become increasingly clear from conversations with our membership that their real issue now lies in the growing tax burden, which is discouraging investment in business growth, including workforce skills and apprenticeships.
The recent increase in National Insurance Contributions (NICs) is a pressing challenge for businesses in the East of England. As of April 2025, the employer NIC rate will rise from 13.8% to 15%, while the contribution threshold will drop from £9,100 to £5,000. Although these measures are intended to generate approximately £25 billion annually to address the national fiscal deficit, they place a significant financial strain on regional businesses.
This comes on top of a rise in the minimum wage, of nearly 7 per cent next financial year, which will add additional cost to many payrolls and will disproportionately impact lower paying sectors, such as hospitality and retail, which are more reliant on younger and unskilled workers.
What does this mean in practical terms? Businesses are left with three difficult choices: passing on costs to customers through price increases, cutting jobs and reducing spending.
The Ashdown Group has already highlighted the likely effects of this change: a decline in full-time job opportunities, increased reliance on freelancers, and stagnant wage growth. Meanwhile, the East of England’s economy spanning key sectors such as construction, manufacturing, agriculture, and life sciences risks slowing down as businesses grapple with these added costs.
As highlighted in the Employer National Insurance Contributions debate in parliament, the British Retail Consortium estimates that retailers alone will face an additional £2.3 billion in costs due to the NIC hike, which could lead to higher prices for consumers.
Small and medium-sized enterprises (SMEs) are particularly vulnerable, as the higher NIC rate increases employment costs, potentially forcing businesses to scale back hiring, limit expansion, or even reduce their workforce.
It is clear that these changes could significantly impact the region. As a result, we want to open a discussion on potential recommendations from the Eastern Powerhouse to address these challenges and ensure a competitive business environment.
The Eastern Powerhouse is committed to advocating for positive policy solutions and seeking views from employers in the region to assess the scale of the NIC challenge. We are undertaking a short survey (see below) which should take less than 1 minute to complete, and we will be planning a roundtable event with businesses, local authorities and national policymakers to discuss and communicate to Government the unique challenges faced by employers in the East of England.