Monday 2 December 2024

A survey of over 200 business leaders who are members of the London Chamber of Commerce and Industry (LCCI) has revealed deep concern about the Government’s ability to deliver growth over the next five years. In a snap survey following the Budget and measures announced in the Employment Rights Bill, 81% of business leaders revealed they were not confident that the Government will listen to and address concerns from the business community, and 77% were not confident that the Government will deliver on its commitment to economic growth. 

Businesses also revealed their disappointment with measures announced in the Budget. 78% of businesses of all sizes said that increased employer national insurance would negatively or very negatively affect their business, leading to many respondents predicting a hiring freeze (45% of those polled) and lower pay (47% of those polled) for staff over the coming years. 

Firms predicted the upcoming Employment Rights Bill would have a significant impact on their operations. 38% predicted the changes would mean a hiring freeze, whilst 16% were concerned it would lead to redundancies. In total, 76% felt that the Government has not meaningfully engaged with the business community on the Employment Rights Bill. 

Family businesses showed concern over measures announced on Inheritance Tax. 21% of family businesses indicated that they were likely to wind up their family businesses instead of passing it on due to the changes announced in the Budget. 

Commenting on the survey, Karim Fatehi MBE, Chief Executive of the London Chamber of Commerce and Industry said: 

“This snap survey has confirmed our worst fears; the business community views the combined package of increased employer National Insurance Contributions, cuts to business rates relief and the Employment Rights Bill as a serious threat to their operations over the coming years. 

“It also shows that London businesses are fast losing faith in the Government’s economic growth strategy. Having weathered a cost-of-living crisis, soaring inflation, higher borrowing costs, and trade tensions, businesses need the operating conditions conducive to economic growth, rather than measures that curtail their ability to invest in their business, hire new people and train their staff. 

“The Government has indicated that it is taking tough decisions to help repair public finances. Whilst we agree with this sentiment, the policies announced in the Budget and Employment Rights Bill have created a perfect storm for businesses in the capital. Curtailing their ability to invest, innovate and drive prosperity across the entire country will result in the Government being unable to deliver the long-term growth which it has made a cornerstone of its strategy.”

ENDS

Notes to Editors

For media inquiries, please contact:     

LCCI Press Office
E: press@londonchamber.co.uk
T: +44 (0)20 7203 1897
M: +44 (0) 7767 110632

Background data

A cut of figures from the survey by business size is copied below, grouped by answers around Government confidence, The Employment Rights Bill and the Budget: 

Under 50 employees

Government confidence

• 91/119 (76%) businesses under 50 employees feel that the Government has not engaged enough with the business community on the Employment Rights Bill.
• Similarly, 102/119 (85%) of businesses under 50 employees are not confident that the Government will listen to and address concerns from the business community following the Autumn Budget.
• 96/119 (80%) of businesses under 50 employees are not confident that the Government will deliver on its commitment to economic growth. Only 7% were either very confident or extremely confident that it would do so.

Employment Rights Bill

• The proposed changes in the Employment Rights Bill will have a significant impact on small businesses under 50 employees.
  1. When prompted as to what their response might be to the measures announced in the Bill, 40% said they would have to freeze hiring new staff, 30% predicted reduced profits, 28% predicted lower pay increases and reduced profits respectively and 17% predicted that redundancies might follow.

Inheritance Tax Bill

• Of small businesses who were prompted ‘If you run a family business which of the following actions might you take in response to an Inheritance Tax bill?’
  1. 43% answered don’t know, but of those who answered, 25% predicted they would have to wind up the business instead of passing it on to a family member.

The Budget

• The Budget will have a significant impact on small businesses under 50 employees.
  1. When prompted as to what their response might be to the measures announced in the Budget, 55% predicted a reduction in profits, 42% predicted a hiring freeze and lower pay increases respectively, and 37% considered a reduction in investment.
• Small Businesses were negative about the proposed increase in Capital Gains Tax from (10 to 18%, 20 to 24%)
  1. 35% were very negative about the proposed measure, with 31% negative. None (0%) of businesses predicted it would have a positive impact on their firm.  
  2. Small businesses were similarly disparaging about the increase to National Insurance contributions, from 13.8% to 15%. 32% predicted it would very negatively impact their business, and 46% negatively. Only 5/133 business (4%) predicted it would have a positive impact on their business.

50-249 employees

Government Confidence

• Of 32 medium sized business (50-249 employees), 78% of businesses feel that the Government has not engaged enough with the business community on the Employment Rights Bill. Only 6% were positive, and 15% were unsure.
• Only 6% were confident the Government will listen to and address concerns from the business community following the Autumn Budget. 71% were not so confident or not at all confident.
• 67% of businesses with 50-249 employees are not confident that the Government will deliver on its commitment to economic growth. Only 6% were either very confident or extremely confident that it would do so.

Employment Rights Bill

• The proposed changes in the Employment Rights Bill will have a significant impact on medium sized businesses.
  1. When prompted as to what their response might be to the measures announced in the Bill, 48% predicted lower pay increases, 39% said they would have to freeze hiring new staff, 30% predicted reduced profits, 30% predicted investment and 21% predicted that redundancies might follow.

The Budget

• The Budget will have a significant impact on businesses with 50-249 employees.  
  1. When prompted as to what their response might be to the measures announced in the Budget, 62% predicted a hiring freeze, 51% predicted lower pay increases, 40% responded with reduced profits and reduced invested respectively, and 37% answered redundancies.  
• Medium sized businesses were almost universally negative about the increase to the National Insurance contribution for employers. 84% answered that it would impact their business either very negatively or negatively. Only 1 business predicted it would impact them positively.

250+ employees

Government Confidence

• 16/22 large businesses (250+ businesses), or 72%, feel that the Government has not engaged with the business community on the Employment Rights Bill sufficiently.
• Only 4% were confident the Government will listen to and address concerns from the business community following the Autumn Budget. 76% were not so confident or not at all confident.
• 72% of businesses with 50-249 employees are not confident that the Government will deliver on its commitment to economic growth. 17% were either very confident or extremely confident that it would do so.

Employment Rights Bill

• The proposed changes in the Employment Rights Bill will have a significant impact on large businesses.
  1. When prompted as to what their response might be to the measures announced in the Bill, 40% predicted lower pay, 36% predicted reduced profits, and 32% predicted reduced investment.

The Budget

• The Budget will have a significant impact on large businesses  
  1. When prompted as to what their response might be to the measures announced in the Budget, 73% predicted lower pay/bonuses for staff, 50% reduced profits, and 42% predicted a hiring freeze.
• Large businesses were cautiously positive about the freeze in corporation tax at 25%, with 26% positive about the move, although 61% said it would have no impact on their business.
•  76% of large firms were negative about the increased employer national insurance announced in the Budget. 20/26 (77%) said it would either negatively or very negatively impact their business.