Devon employers freeze hiring as NI and wage costs bite ahead of Budget

Employers' National Insurance jumped from 13.8% to 15% on salaries above £5,000 in April 2025 — and Devon businesses say the rise has frozen their hiring plans ahead of Wednesday's Budget.

That's the concrete backdrop to this week's fiscal event. Firms speaking at the Devon Business Show, hosted by Devon Chamber of Commerce at the Plymouth Life Centre, said they have spent two years absorbing the 2024 changes while also coping with National Minimum Wage increases. They want Chancellor John Healey — delivering his first Budget on Wednesday — to reverse direction. Healey has refused to rule out tax increases after acknowledging government borrowing costs sit at "historic highs".

What does this change for small employers?

For Tim Randell, who runs Links Publishing in Tavistock, the arithmetic is simple. He has two vacancies he wants to fill and won't, because taking on staff costs too much.

"All we've had for the last two Budgets is more tax, more expense, the living wage, and all those things mean that people like me are not employing the young," Randell said. "I have two positions that I could fill, want to fill, want to expand and grow my business, but I'm holding back because of the employment costs."

The numbers behind his hesitation: in the 2024 Budget, Rachel Reeves announced companies would pay NI at 15% on salaries above £5,000 from April 2025, up from 13.8% on salaries above £9,100. In the same month, the legal minimum wage for over-21s rose from £11.44 to £12.21 an hour — roughly a 7% increase.

Michelle Bunker of WGP Maintenance in Plymouth had one message for the chancellor: "I want to see National Insurance contributions starting to go down."

Kevin Miller, who heads Plymouth-based Apex HR, framed small businesses as "the backbone of the whole economy". His ask was blunt: "We need to reduce the cost of employing people because we're all passionate about really wanting to build this economy and grow it - so help us out with some tax relief please..."

Charities feel the squeeze too

The cost of living crisis isn't only a business problem. Elsbeth Hallam of Plymouth-based Hugs Children's Cancer Charity, which supports families with children who have cancer, said household caution is hitting donations.

"People are definitely being tighter on what they're spending their money on," she said. "For us, obviously it does have a run-on effect then on what we can raise and how many families we can support."

Hospitality wants a VAT cut

Tens of thousands of people work in hospitality and catering in Devon, and hotel bosses say the industry has been through a tough stretch. The sector — spearheaded by celebrity chef Tom Kerridge — has long campaigned for a VAT reduction for pubs and restaurants from 20% to 10%.

Melanie Williams, events manager at the Duke of Cornwall Hotel in Plymouth, said: "I think people's financial pockets are strained and any support we can be given from the government within the budget has got to benefit everybody in the industry - VAT perhaps to be revisited again."

Pete Adams, general manager at the Moxy Hotel in Plymouth, argued the cut could pay for itself. "That would allow us to pass some of those savings on to the customer. That will then hopefully increase more customers into our businesses and extra spending and that'll give the Treasury almost as much money as before."

What the Treasury says

Helen Wylde-Archibald, CEO of Devon Chamber of Commerce, said Devon firms were "planning for a better future" and asked for restraint from the chancellor.

"I think what we just need is that soft touch with the Budget so that businesses get the chance to grow and I think Devon will be right at the front of the pack," she said.

The government insists it is "on the side of business" and says easing the cost of doing business is one of the chancellor's five priorities. An HM Treasury spokesperson pointed to existing support: "The chancellor is giving firms the breathing space to invest and grow, with business rates cuts, a cap on corporation tax, £4.3 billion of support to limit bill rises, and employer National Insurance contributions relief when hiring under-21s and apprentices under 25."

The Treasury added: "As has always been the case, decisions on tax are a matter for the chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals."

Wednesday's statement will show whether Healey hears the hiring freeze as a warning — or keeps the tax levers where his predecessor left them.