Employers

Paul Holmes Excerpts

Wednesday 11th November 2026 Commons Chamber

[Daisy Cooper]

I do indeed acknowledge that. It was a slip of the tongue. Many parties were fighting tooth and nail to stop the damage of the Conservatives’ botched Brexit deal. I hope very much that at the EU summit, the Labour Government will move a great deal further than the timid approach they appear to be taking now.

[Paul Holmes (Hamble Valley) (Con)]

Will the hon. Lady give way?

[Daisy Cooper]

I will happily give way, all day long.

[Paul Holmes]

Will the hon. Lady acknowledge that economic growth in Europe is lower than the economic growth in this country? Perhaps she could also tell the House how much her party, under its policy proposal, would be willing to pay to join the single market. Would that not take money out of the economy that we could be using to increase growth domestically?

[Daisy Cooper]

The hon. Gentleman will, I hope, accept that growth in one country is not equivalent to growth in another country. When we tear down barriers between countries, we increase growth. Plenty of modelling has been done by the national economic social research unit in America, and by other bodies in this country. I am not sure, but I believe it is PwC that has talked about the amount of growth we would gain from the single market. We believe that joining the single market and the customs union would bring in about £29 billion and that the cost would probably be about £2 billion, so the growth that we would gain would massively exceed the cost of joining.

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[Dr Jeevun Sandher (Loughborough) (Lab)]

I want to start a bit differently today, if I may. My parents were employers; they were business people. They employed me in what was probably my first job. As the son of immigrants, I did not get a choice as to whether I took up that employment. I am not quite sure if I was paid the minimum wage, but working taught me something. It taught me what it meant to earn money; it taught me the pride in work; and it taught me what I got at the end of it. I will never forget working for a week, and then buying a turquoise iPod Mini. I loved that iPod, partly because I was really hip and cool, of course—

[Paul Holmes]

You still are!

[Dr Sandher]

Stop it! The hon. Member is too kind.

I had a sense of pride, because I knew that I had earned that iPod; it was the fruits of my labour. When I was growing up in the ’90s and ’00s, I saw business people doing well, partly because we were growing under a Labour Government, but also because the conditions of business worked. My parents knew that their workers had skills and were healthy, and they also knew that workers and families across the country were living good lives at that point in time. They could afford a decent life, and to spend money down the shops and on the goods that my parents were producing and selling. I saw them do well, and I saw business do well. Part of the reason why I became a member of the Labour party is that I want to see every single person do well and thrive. I saw businesses thrive, and I saw my parents’ business thrive.

I also joined the Labour party because we are the party of work—the clue is in the name. I want every single person in this country to have a good job, but we are quite far away from that, and we have been for quite a while. About 40% of people in full-time work cannot afford to raise a family, because there are not enough good jobs in this country. Post-industrial areas are still post-industrial, and they are the most deprived parts of this nation. They have not been doing well for an incredibly long time. We have to do more to create good jobs across our country.

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[Paul Holmes (Hamble Valley) (Con)]

British businessmen and women are integral to the growth and sustainability of our nation’s finances. A nation’s economic strength is measured not simply by the size of its Government, the amount it spends or the number of regulations it imposes, but by the confidence, enterprise and ingenuity of its people. It is built by those who take risks, start businesses, employ others, run shops, run pubs, manufacture goods and provide services. It is built from the ground up.

Yet at precisely the moment when we should be strengthening the foundations of our economy, this Government are placing an ever greater pressure on the very businesses that sustain it. I fear that this Government simply do not understand the reality of running a business in Britain today. Indeed, we have seen that in the last couple of weeks. Take the comments by the Chief Secretary to the Treasury that employers are not working people. I do not think a political soundbite has resonated with so many across the country for a long time. I cannot overstate the hurt and insult that that comment caused to the men and women of this country who have had an idea, who get up early, who have gone out and built something, and who have given their employees a start in life, such as a young apprentice they have taken on, even if it means that they have to reduce their own pay to keep open or keep operating. They are the first ones out to work in the morning and the last ones home in the evening. Those comments hurt people, and although the Minister has apologised, I believe that she perfectly summed up the dire situation that this Government have caused for businesses up and down the country.

At the autumn Budget in 2024, the then Chancellor announced an increase in employer national insurance contributions of 1.2 percentage points alongside a reduction in the threshold at which employers begin to pay national insurance from £9,100 to £5,000. That happened despite Labour having promised that it would not do it. Ultimately, businesses have three options: absorb the additional cost, pass it on to their customers through higher prices or reduce their costs elsewhere. Both the Centre for Policy Studies and the Office for Budget Responsibility warned that those measures would lead to higher consumer prices and lower nominal wages. They have affected 1.2 million employers, and 940,000 people have lost out financially. They leave the average employer facing a net increase that will see their liabilities rise by approximately £26,000. Those are not abstract figures; they represent real businesses, real jobs and real decisions about whether to invest, expand or even remain open.

I want briefly to bring the debate closer to home by highlighting the experience of some local businesses in my constituency. Cherrywood Kitchen in Netley, run by Jason Hardcastle, is a small hospitality café that provides local employment and contributes to the community. He has seen a clear impact on the operating costs of his café since 2024, with national insurance contributions rising by over £2,000, VAT liabilities increasing by £4,000 and a weekly wage cost now exceeding £12,500. His cafe is busy. He has seen turnover increase every year that he has operated, but the actions of this Government have meant that he now takes on fewer people and does not take any profit home at the end of the week.

Another local business owner, Matthew Boyle, operates a number of excellent hospitality venues in my constituency, employing local young people—people who the Government claim they want to support. He spent 23 years building his hospitality business, which now employs 175 people, but this Budget and this Government’s actions will add £230,000 of additional annual costs to his business.

[Stuart Andrew]

My hon. Friend makes an important point. Is he struck, as I am when I meet these business people, by how physically broken they sometimes look because they simply do not know how they are going to survive? Their life’s work and their dreams have been torn to shreds by this Government.

[Paul Holmes]

My right hon. Friend makes an excellent point, and I go through the same thing as him. One of the most frustrating things on a Friday, when I go to see businesses in my area, is that I have no hope to give them because this Government have given them no hope. The Government need to listen to business people like Matthew who create the jobs and the wealth in the country that they love spending so much.

Ministers must recognise that businesses are not simply a source of revenue for the Treasury; they are the wealth creators of our economy. That is why I am delighted that the Leader of the Opposition has set out our party’s policies on how we would help to meet the challenge that the Government have caused including, as my right hon. Friend the Member for Daventry (Stuart Andrew) said, by halving national insurance contributions for people aged 21 to 24, saving £1,500 for employers, and abolishing business rates for hospitality. I also believe that we need to consider a VAT cut for hospitality businesses.

If we want thriving high streets, more jobs, better wages and a stronger economy, we must start by making Britain a better place to do business. Employers are working people because they create prosperity—not the Government, and certainly not this Government who are actively making the situation worse. It is not the Government who create prosperity; it is the people and businesses of this country, and they deserve better than what they are getting under this dire Labour Government.

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[Peter Fortune (Bromley and Biggin Hill) (Con)]

It is a pleasure to close this debate, and I thank every Member who has spoken across the House. That includes the hon. Members for Loughborough (Dr Sandher), for Truro and Falmouth (Jayne Kirkham), for East Wiltshire (Danny Kruger), and for Norwich North (Alice Macdonald)—Norwich is a fine city.

On the Opposition Benches, I thank my right hon. Friend the Member for Witham (Priti Patel), who took us on an excellent canter through the businesses in her constituency. I thank my right hon. Friend the Member for Daventry (Stuart Andrew), and my hon. Friends the Members for Central Suffolk and North Ipswich (Patrick Spencer) and for Mid Leicestershire (Mr Bedford). My hon. Friend the Member for Hinckley and Bosworth (Dr Evans) talked about the importance of the word “yes”, and I will hold him to that in future. I thank my hon. Friends the Members for Hamble Valley (Paul Holmes), for South West Devon (Rebecca Smith), for Keighley and Ilkley (Robbie Moore), and for South Northamptonshire (Sarah Bool), and my right hon. Friend the Member for Tatton (Esther McVey).

My right hon. Friend the Member for Beverley and Holderness (Graham Stuart) gave an excellent speech about his business sense; he also talked about his sweaty palms, which explains some of his bowling when we are playing cricket. The most important contribution was from my hon. Friend the Member for Droitwich and Evesham (Nigel Huddleston), who talked about the reality of businesses failing, and the 662 jobs that have been lost due to the squeezed margins at Kanes Foods—we wish them all well.

If this debate comes down to anything, it is two simple truths: if we tax growth, we get less growth; if we tax jobs, we get fewer jobs. That is not ideology; it is the exact logic that Government will use when they tax things such as tobacco. The difference is that the Conservatives would very much like to see more jobs.

Let me be clear what I am talking about: employers are the café owner who opens at 6 am; the scaffolder out in the rain; the builder, the hairdresser, the gym owner and the hotelier; and the pub landlord, who on any given night is also the cleaner, the accountant and, when needed, the bouncer. They take the risk, they put their own house on the line, and then they do something remarkable: they give other people a job. They are the backbone of our high streets and our economy and we value them.

In Bromley and Biggin Hill, I see them every week, in places such as The Oak pub in Bickley, Tip Top key cutters in Hayes, or the Spitfire Café in Biggin Hill. They are not asking for special favours; they are asking not to be charged more for doing the very thing that the Government say they want them to do, which is to give someone a job.

That brings me to the remarks of the Chief Secretary to the Treasury on the first of this month, when she told GB news:

“I don’t think employers are working people. They are companies.”

I do not say this to be unkind. Every one of us has said something careless over the weekend that we have then spent Monday morning trying to explain—I certainly have. By the next day, it had fallen to the Science Minister to tell LBC that employers are working people. I have always believed in following the science, and I hope the Treasury will, too.

I have met a great many companies in Bromley and Biggin Hill since then, and some were greatly distressed and hurt by that statement. These are hard-working people who felt undervalued, disregarded or that their work was being disrespected; some were angry; and most of them have a first name. They open early, close when the last customer leaves, and do the VAT return at the kitchen table on a Sunday night. If that is not working, I would love to know what is.

This matters because of a promise. Before the election, Labour said in its manifesto that it would not increase taxes on working people, and that is why it would not increase national insurance. Businesses up and down the country were told again and again that Labour was on their side. Then came the first Budget, when the rate of employer national insurance went up from 13.8% to 15% and the threshold at which employers started paying fell from £9,100 to £5,000, bringing in around £25 billion a year with a tax on every job in the country, paid before a single new person is taken on. The only way for Labour to square its promise with that tax was to decide after the election that the people paying it no longer count as working people. With respect, that is not a definition; it is an escape hatch.

We warned that this would happen, as did the OBR, which said at the time that the rise would mean higher prices and lower wages, that around 940,000 employers would lose out, and that the average employer losing out would face a bill around £26,000 higher. The number of people on payrolls has fallen for most of the past two years. Youth unemployment is at its highest in more than a decade. Earlier this year, the number of young people neither earning nor learning passed 1 million for the first time in more than 12 years. That should trouble every one of us. When a Government put up the cost of hiring, the first person not hired is the one without experience. That is no judgment on them; it is just the arithmetic.

Here is the part I find hardest to square: this tax was sold as a tax on businesses, not on working people. However, the OBR’s own assumption is that over time, around three quarters of the cost—76%—is passed on to employees through lower real wages. This means that the tax that was not on working people turns out to be paid mostly by working people—it is just done behind a curtain of accountancy and in a way that never appears clearly on the front of the payslip. Instead, it appears in the pay rise that did not happen, the extra shift that was not offered and the job that was never advertised. Those are the hardest losses to see and the easiest for Government to overlook.

It is not only the high street. Think about who else is an employer: the GP practice, which is a private partnership and pays employer national insurance like anyone else; the care home; the nursery; the community pharmacy; and the local hospice, which is a charity, raising money one fun run at a time. I recently visited Demelza hospice, a remarkable charity that helps life-limited children and their families. The compassion staff bring to their roles was matched only by the frustration of rising employment costs, putting specialist staff at risk.

When this tax was announced, many hospices were surprised to find that they were caught by it. They had heard that the NHS would be protected, and assumed that that meant them. It did not. Every pound a hospice spends on national insurance is a pound raised at a cake sale that never reaches a patient.

Then there are the businesses I speak for in my own brief as shadow Minister: our fantastic hard-working manufacturers—firms that compete with the whole world on thin margins and that often have to train skilled people from scratch. Raising the cost of employing someone means raising the cost of training them, too. That is the last thing a country that wants to make things again should be doing.

Bill Perera, who employs more than 700 people in Bromley through his McDonald’s franchises, said that

“while individual measures may be manageable in isolation, their combined effect is placing a strain on investment, recruitment and long-term growth.”

National insurance, the wage bill, energy costs and new employment rules—each one on its own looks manageable, but together they decide whether a business takes on one more person.

The new Prime Minister and new Chancellor promised breathing space. It is a lovely phrase—I will give them that. But for the employer staring at a higher national insurance bill, a higher wage bill and a higher energy bill, it feels less like breathing space and more like they are holding their breath. A new Prime Minister was a chance for a new start; instead, we have simply put a new cover on an old book.

I want to be fair to the Government, because I know what Labour Members will say, and it deserves an answer. They will say that they inherited difficult public finances. Every new Government say that. I will not pretend that the choices were easy, but choosing how to fix things is the whole job of Government. They chose to put a tax on jobs after promising not to. At the very moment that the economy needed more people in work, that was the Labour party’s choice. They will say that they protected payslips—that employee national insurance, income tax and VAT were left alone. But as I have said, the OBR experts say that the workers carry the cost anyway. The Government can protect the front of the payslip and still shrink what is written on it.

Labour Members will say that we raised national insurance ourselves in 2022. We did. We listened and reversed that within months, because it was the wrong call at the wrong time. There is no shame in changing your mind when the evidence changes. I say gently to the Government that it is one of the few things in politics that it is never too late to do.

[Paul Holmes]

Does the shadow Minister agree that the key difference between our increase and the Government’s increase is that in their manifesto to win the general election in 2024, they said that they categorically would not raise national insurance?

[Peter Fortune]

I thank my hon. Friend for his intervention. Saying one thing and doing another is something that we are getting very used to from this Government.

What would we do? We would halve employer national insurance for workers aged 21 to 24, taking the main rate down to 7.5%. We are not inventing a new idea here. Under-21s and apprentices under 25 already pay no national insurance on most earnings. That was a Conservative reform and this Government have kept it, so I take it that they agree that it works. All we are asking is why that help should stop on someone’s 21st birthday, just as so many are leaving university or college and looking for a proper start. Nor is it only a Conservative idea. The cross-party Work and Pensions Committee recommended in July that the Government extend the relief to all under-25s. When a Committee with both Labour and Conservative Members agrees on something, it is usually worth a second look.

Most of us in this House remember our first job and the person who took a chance on us. Mine was at the South London Press in Streatham—though, to be fair, I think they regarded that as a mistake pretty sharpish. For a lot of young people, that first chance comes as a job in a café, shop, pub or hotel. Those are exactly the businesses that this tax hits hardest and that our plans would help most. On business rates, we would give retail, hospitality and leisure businesses full relief—up to £110,000 each—so that our high streets have genuine room to grow and hire. We look at the whole bill that businesses face—not one line of it—because that is how the person running a business has to look at it too.

Napoleon supposedly called us a nation of shopkeepers. I am sure he meant it as an insult, but as we know things did not go terribly well for poor old Boney after that, and I consider it a compliment—a strength, part of our industrious culture and something we can be proud of. The motion asks the House to agree with something that most of our constituents would think goes without saying: that the person who opens the shop, runs the pub or builds the extension and who pays the wages of the people working alongside them is a working person. If Members agree with that, they can say so tonight in the Lobby.

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[Dr Luke Evans]

rose—

[Paul Holmes]

rose—

[Blair McDougall]

I will give way to the hon. Member for Hamble Valley (Paul Holmes) for one last intervention and then I will make some progress.

[Paul Holmes]

The Minister has outlined the £2,000 payment to businesses. Does he think that it is best for a Government to administer that payment or to reduce taxation on businesses so that they can choose to employ younger people without that Minister getting in the way?

[Blair McDougall]

It is precisely because we recognise, as many right hon. and hon. Members have mentioned, that retail and hospitality give so many young people their first job that we are lifting so many of those businesses out of business rates and lowering the tax burden on those individuals.

I will follow the Prime Minister’s lead and note that we agree on a lot despite the debate across the House. We agree, as many hon. Members have said, that small businesses in particular are the backbone of our economy, we agree that more must be done to support business to employ people, and we agree that young people should be supported.