'It's going to hit hard': Businesses warn of job cuts following Chancellor Rachel Reeves' Budget

  • WATCH: Business owners in Exeter react to the Chancellor's Autumn Budget

Small business owners in the West Country have warned the Government's Autumn Budget will "hit hard," with one saying they're even considering moving their company abroad.

Chancellor Rachel Reeves announced a host of measures designed to raise £40bn as part of her Budget in Parliament on Wednesday, 30 October 2024.

Among these measures are a rise in the national minimum wage and a hike to employers' National Insurance Contributions (NICs), a form of income tax.

But small businesses have warned - before and since these announcements - that these policies will force some businesses to close and could lead to staff being let go.

After hearing the news about dual rising costs of NICs and the minimum wage, Krishna Chand, who runs a family-run food company in Bristol, said that in the future "if I need 12 staff, I will go for ten".

He said: "We live a tight life actually because of what's going on with the Budget. Customers are spending less, and as a business, we need more money to run our business. So this is having an impact on reducing staff.

He also fears that the changes will see more small businesses struggle to stay open - and he is even thinking about moving his company abroad.

Krishna said: "Because they're increasing the minimum wage and increasing the National Insurance [Contributions], it's going to have an impact on everyone. Lots of businesses are closing down.

Krishna (second from right) and his family. He says the Chancellor's budget will lead to job losses.

"We as a family business are also looking to relocate just because of what's going on in this country. We are not sure we are going to be here for five, seven years. We don't want to live here, unfortunately.

"The life is not what it used to be before. Now, we have to spend more time in the business just to sustain the profit and to keep other staff happy, and to pay the wages on time".

Asked if the Budget has encouraged him to take his family business abroad, he replied: "110%".

"The government has to really consider the small businesses," he continued. "They should not look at only the people who are under-earning as employees, they should also look at the people running the businesses who are also under-earning. They should help them, they should support them".

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Unlike many small business owners, Krishna said he does "not blame Labour".

He said: "Yes, it is going to have a hard hit, but the people preparing the Budget have the best interest for the country, for the businesses and for the people who employ people".

Peter Eastwood, who founded and runs a soft furnishings company in Berkley, Gloucestershire, is also now "taking stock" of the Budget, and has concerns about the future.

"It's quite a concern - I think we were expecting some bad news," he said.

"We've gone from two people to 17 people in a couple of years, and we're going to put that on hold, I think, for a while. So, that's a big concern for us, what it means for us over the next three, four, five years.

"We've got a lot of staff and the biggest thing we have to do every month is pay them. And that's the biggest concern we have. We support pay rises but we've got to be able to afford them and at the moment, we're just very nervous about all the extra that we're finding coming at us."

Peter (left) says that small businesses like his feel "targeted" and that years of increasing costs "hurts".

He told ITV West Country that he feels "apprehensive" and "targeted" by the Government's Budget.

"It's the accumulation of things over the last four or five years and I think there has been a lot of increases on small businesses for a long time and that hurts," he said.

"Small businesses, in the round, generally pay huge amounts of tax and don't avoid it," he said. "They lump us together as if we're all fat cats and that's not the case in business. Most people are working their socks off".

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Peter said he would like to see more people with experience running small businesses in Government, adding he believes "small businesses are the backbone of this country".

Nicola Wheeler, from Exeter Business Improvement District (BID), also fears that the minimum wage hike will cost jobs and could even lead to some businesses closing down.

She said: "Whilst we completely understand and agree with the right to protect workers, in actual fact, I am worried that in the long-term we will see that employers are unable to create jobs, they are going to be potentially making people redundant and, in the long-term, potentially, businesses will be having to make difficult decisions about whether or not they can continue to operate".

Torbay's Liberal Democrat MP Steve Darling says the issue of crumbling hospital estates in the South West is being 'kicked into the long grass' by Labour, while the hit to small businesses could 'hold back growth'

Simon Thompson, the owner of a cafe in Newquay, added that he has been left "very worried" by the Chancellor's Budget and said changes to NICs have added a nine per cent increase to his bill.

"The real surprise to me is they've also lowered the rate at which I start paying National Insurance, so that will be a big jump for me.

"And then with minimum wage going up, that's marvellous for the people I employ, I am happy for them. But the constraints that puts on me as a business owner, with rising costs of production, electricity, wages, tax. The questions I will be asking myself over this winter will be 'can we sustain that as a business?'"

But not every small business owner is concerned - some can see the positives.

Matthew Cousins, the owner of a scaffolding company in Exeter that employs around fifty people, fears the hike in NICs will cost the company tens of thousands of pounds. But he admits that "now at least the uncertainty is over".

Matthew is also board director of the city's Chamber of Commerce.

He said: "A lot of the Chamber members have been saying that they don't know what has been happening, and what is going to happen and at least now they do and can plan for it," he added.

Matthew Cousins fears the hike to NICs could cost his scaffolding business tens of thousands of pounds.

'They are not for the people, they are all for themselves' - How people are reacting to the Budget

"I am sure they are trying to do their best", one person in Exeter told ITV News West Country. "Everybody wanted a change, I am not sure they are going in the right direction but only time will tell."

Another person in the city said raising the cap on bus fares by 50%, from £2 to £3, will have a "big effect".

"My son and daughter work in town and they will be paying the extra, without really any wage increases", they added.

Meanwhile, a third person said they think it's "absolutely disgusting what [the Government] are doing".

"They are not for the people, are they? And they're not for the working class either. They are all for themselves," they said.