It will be harder for people to find first jobs

Tax changes announced in the Budget will make it “harder for people to get into the workforce”, according to the boss of retail giant Next.

Lord Wolfson told the BBC that a rise in National Insurance paid by business would hit the retail sector particularly hard and mean “the ax has fallen particularly hard” on entry-level jobs.

He called on the government instead of introducing tax changes in April to hit them over time, otherwise jobs or hours would have to be cut.

But a Treasury spokesman said the budget measures were to “sweep the plateau” and provide stability for businesses.

In last October’s Budget, the government increased the rate of National Insurance (NI) paid by employers from April, and also lowered the threshold at which employers start paying it from £9,100 to £5,000.

Businesses are also facing an increase in the National Living Wage in April at twice the rate of inflation.

Lord Wolfson, who is a Conservative peer, said the changes would hit those employers with large numbers of lower-paid or part-time workers hardest.

Next’s wage bill is set to rise by £70m and Lord Wolfson said this would lead to a reduction in staff hours – either through fewer workers or fewer hours per employee.

He called on the Government to lower the NI threshold over time, rather than the months notice employers received in the October Budget.

He said that while the tax rise for a £60,000-a-year job is around 2%, the rise for a part-time salaried employee is around 6.5%.

“So the ax has fallen particularly hard on those entry-level, National Living Wage jobs, and that’s where the pain will be felt the most.”

Lord Wolfson said it was not just a concern for retailers but a concern for the economy as a whole. Next received 13 applications for each Christmas vacancy this year – 50% more than last year.

“My concern is that it’s going to be harder and harder for people to get into the workforce,” he said.

“It is very difficult to see how such a large increase in the cost of entry-level labor will result in anything other than a reduction in the number of available opportunities.”

But a Treasury spokesman said more than half of employers would either see a reduction or “no change” to their National Insurance bills.

They added that they were “creating the conditions” for economic growth through measures including capping the corporate tax rate and creating a National Wealth Fund.

The NI and minimum wage measures have drawn criticism from UK companies, who argue the changes run counter to the government’s aim to boost economic growth.

Earlier this month, British Chambers of Commerce said confidence had ‘fallen’with more than half of companies planning to raise prices in the next three months in the face of a “pressure cooker of rising costs and taxes”.

Last year, Next was one of the signatories a letter from UK retailers to Chancellor Rachel Reeves calling for a review of the budget measures.

The letter said job losses on the High Street were “inevitable” and also warned that prices would rise and shops would close.

It then made over a billion pounds in profits last year, while other large, workforce-intensive retailers – such as Tesco and Sainsbury’s – also made huge profits. Lord Wolfson admits they are the “broad shoulders” the chancellor insisted must bear the burden of the tax hikes needed to rebuild public services.

“The government needed to raise taxes. I have nothing against lowering the threshold for NI in principle, but the speed at which it will happen, the lack of consultation, that is the problem.”

Lord Wolfson also has concerns about a new workers’ rights bill.

This promises to give greater protection against unfair dismissal and “exploitative” zero hours contracts, with employees able to claim a guaranteed hours contract based on hours worked over a period. But this can pose a problem for retailers.

“We offer staff extra hours in the run-up to Christmas. If the legislation means that those hours have to be contractually binding forever then we simply won’t be able to do it at all, it would be impossible.”

He has some advice for the chancellor in her efforts to boost business growth and confidence. Start in your own backyard.

“Over the past five years, the government has hired 100,000 more civil servants.

“We cannot continue to spend over 40% of GDP on the public sector. It needs to become more efficient and if the government can commit to doing that – and doing that – then I think it will do more for business confidence than anything else.”