U.K. Social Security Cuts Will Save Employers 5.5 Billion PoundsSvenja O’Donnell
U.K. measures to cut companies’ social-security contributions will save employers 5.5 billion pounds ($9 billion) a year starting in April 2015, according to Treasury forecasts.
The savings will come from measures including the introduction of a 2,000 pound employment allowance in the next fiscal year; scrapping National Insurance for employees under the age of 21 starting in April next year and the government’s 2011 decision to raise the threshold at which businesses start paying NI contributions, the Treasury said in an e-mailed statement.
“Small businesses make a vital contribution to our economy, creating jobs and stimulating growth,” Chancellor of the Exchequer George Osborne will say today, according to prepared remarks released by the Treasury. “Effectively providing cashback on jobs, the Employment Allowance will help these businesses achieve their goals and help the U.K. succeed.”
With 16 months to go before the next election, Osborne is hoping falling unemployment and economic growth will offset the impact of austerity as his Conservative Party lags in the polls. Previous credit-boosting measures introduced by the Treasury and the Bank of England have been criticized for helping the mortgage market rather than small and medium-sized businesses.
The chancellor said earlier this week that further cuts to spending are needed to fund tax cuts and sustain the recovery. The employment allowance, announced in his Budget in March, will take as much as 2,000 pounds off the social-security contributions that companies pay and benefit 1.25 million U.K. businesses, the Treasury said.