Reverse tax increase to ease living-costs crisis, say bosses

RISHI SUNAK should reverse the National Insurance hike to “put money back into the pockets of people” amid the cost-of-living crisis, business leaders have said.

The British Chambers of Commerce (BCC) called for an “emergency budget” including the reversal of the recent increase to National Insurance Contributions as part of efforts to reduce cost pressures on businesses. The business group said the Chancellor should also cut the VAT on firms’ energy bills from 20pc to 5pc for at least a year.

Companies are facing cost pressures from a variety of corners, including rising prices for energy and raw materials, and a sustained elevation in freight transport costs.

Shevaun Haviland, BCC director general, said: “The costs crises facing firms and people in the street are two sides of the same coin. If we can ease the pressure on businesses then they can keep a lid on the price rises being driven by surging energy bills, staff shortages and higher taxes.

“Firms will then have the breathing space they need to raise productivity and strengthen the economy. But a change of course is needed now, if the Government does not act immediately then rising costs will put our economic recovery in a stranglehold that will have repercussions for years to come.”

Ms Haviland, who has written to the Treasury, is also calling for the reinstatement of free Covid tests to “ease the strain on productivity caused by persistent high absences”.

According to BCC surveys conducted in April, two thirds of companies were reporting staff absences due to Covid symptoms or self-isolation. “Bringing back free testing would allow firms to limit the disease’s spread among employees,” the BCC said.

The Bank of England warned last week that the UK is on track for a recession and double-digit inflation, with a further surge in energy prices expected in October. Officials are predicting the second-biggest hit to disposable incomes on record, dealing a fresh blow to households and businesses – many of which only just scraped through the pandemic.

Mr Sunak’s Cabinet colleagues have reportedly urged the Chancellor to cut VAT and corporation tax to ease the pressure on businesses.

A Treasury spokesman said: “No government can control the global factors pushing up prices, but we will act where we can to support businesses.” The Government “provided an unprecedented package of support that saved millions of jobs throughout the pandemic,” they added.