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NEXT CEO warns NI hikes will make finding jobs harder

Chloe Burney
17 January 2025

The budget, which announced tax changes and National Insurance hikes, could make it "harder and harder for people to enter the workforce", according to NEXT’s CEO Lord Simon Wolfson.

National Insurance (NI) paid by businesses is set to hit the retail sector particularly hard, which will in turn affect the worker, especially those starting their careers.

In October's Budget, the Government increased the rate of National Insurance paid by employers from April and also reduced the threshold that employers start paying from £9,100 to £5,000.

Lord Wolfson, a Conservative peer, has called on the Government to stagger the tax changes over time, rather than introduce them in April, otherwise, jobs or hours would have to be cut.

He told the BBC that these 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 £70 million, and Lord Wolfson said this would lead to a cut in the number of employee hours worked – either through fewer workers or fewer hours per employee.

Similarly, Marks & Spencer recently revealed it will be facing a £120 million hit to its wage bill from recent Budget measures.

However, the British department store said it would look to hold prices "as much as we can", though the retailer said it was having to look across the business to find ways to offset the impact.

Fellow retail giant Tesco also said it would look to minimise price hikes as the sector has been left reeling from Budget moves to hike national insurance contributions (NICs) and minimum wages.

"The axe has fallen particularly hard on those entry-level, National Living Wage jobs, and that's where the pain is going to be felt the most", said Wolfson, adding that it was not just a worry for retailers but a concern for the economy as a whole.

"My worry is that it's going to be harder and harder for people to enter the workforce," he said.

"It's very difficult to see how such a big increase in the cost of entry-level work is going to result in anything other than a reduction in the number of opportunities available."

A spokesperson for the Treasury said more than half of employers would either see a cut or "no change" in their National Insurance bills.

According to the British Retail Consortium (BRC), two-thirds of leading retailers warned they will be forced to hike prices to cope with the increase in National Insurance costs amid mounting pressure on the Chancellor.

67% of 52 Chief Financial Officers surveyed for the BRC said they would raise prices in response to increases in employers’ National Insurance Contributions from April. Just over half (56%) said they would be reducing their paid number of hours and overtime, while 46% said they have to reduce headcount in stores and 31% said the increased costs would lead to further automation.

NEXT was one of the signatories on a letter from UK retailers to Chancellor Rachel Reeves calling for a rethink of the Budget measures last year. The letter said High Street job losses were "inevitable" and also warned that prices would rise and shops would close.

New Look, a cornerstone of the UK high street since 1969, is set to increase the rate of its store closure programme ahead of tax increases this April. It has revised its store estate twice in the past six years and downsized its portfolio by almost half from 600 stores in 2018.

Meanwhile, Frasers Group has reduced its profit forecasts for the year after witnessing "weaker" confidence among shoppers leading up to and since the autumn Budget.


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