Desperate businesses plead with Keir Starmer to promise no more tax increases

Employers are demanding Sir Keir Starmer rule out further tax increases as a new survey of firms found they are struggling to cope with hikes to National Insurance and are cutting back on investment. The annual survey by the British Chambers of Commerce found business confidence remains at its lowest level since the "mini budget" in 2022, when Liz Truss was Prime Minister.

It was published after senior Cabinet Minister Pat McFadden refused to rule out further tax increases, following the Government's u-turn over cuts to disability benefits which will leave the Treasury with a £4.8 billion black hole. Shevaun Haviland, Director General of the British Chambers of Commerce (BCC), said: "Last week, the Prime Minister acknowledged at the BCC's Global Annual Conference that business has been asked to shoulder a huge tax burden. We now need the Government to rule out any further business taxes in this year's Budget."

Asked about the impact of the benefit cut u-turn, Mr McFadden, Chancellor of the Duchy of Lancaster, said: "This is a decision that will have financial consequences." And he said: "We will stick to the tax promises we made in the manifesto."

Labour's manifesto promised no increase to rates of income tax, VAT or National Insurance. However it did not rule out other tax increases, such as extending a freeze on income tax thresholds which effectively means workers pay more, and Labour has also stated that the National Insurance pledge only applies to employee contributions, not National Insurance paid by employers, which it has already increased.

Andrew Griffith, Shadow Secretary of State for Business and Trade, said: "This research by the respected British Chambers of Commerce shows the majority of businesses are worried about tax. They are right as by their deeds and words, this government clearly sees business as a cow to be milked.

"Thanks to Labour's failure to reform welfare, once again we have a long, hot summer of uncertainty whilst the Chancellor decides whose pockets to pick next."

The business survey found just under half of firms (49%) expecting turnover to increase in the next 12 months. Tax remains the main concern for firms, with 56% citing it as a worry closely followed by inflation, a worry for 52%.

A quarter of firms, 24%, have cut back on investment in the past three months, while only 21% have increased investment.

Managers at a small manufacturing firm in Liverpool told the British Chambers of Commerce: "Rising employment costs, including increases in National Insurance and minimum wage, are placing significant pressure on margins."

A manufacturing firm in the West of England said: "The government missed an opportunity in the last budget to invest in business and support growth, instead taxing businesses until they are no longer viable."

David Bharier, Head of Research at the British Chambers of Commerce said: "April's rise in National Insurance contributions has cemented tax as the dominant concern for firms. Businesses are entering a new employment landscape marked by structurally higher labour costs and administrative requirements, fuelling increased anxiety about redundancies.

"While there has been some easing in our price expectations indicator, this follows a spike to near historic highs in Q1 and may indicate that firms already baked in the recent National Insurance increase. Inflation is likely to remain volatile in the short term, as any escalation in global conflict could trigger renewed shocks to commodity and shipping prices."