Employer National Insurance Contributions: Small Businesses in Hampshire

Debate between Alex Brewer and Danny Chambers

Wednesday 2nd September 2026 Westminster Hall

[Alex Brewer (North East Hampshire) (LD)]

I beg to move,

That this House has considered the impact of changes to employer National Insurance contributions on small businesses in Hampshire.

It is an honour to serve with you in the Chair, Mrs Barker. I am equally privileged to be joined by a number of local business owners from North East Hampshire, who are in the Public Gallery.

Soaring energy costs, a business rates system in desperate need of overhaul and, perhaps the most damaging of all, a rise in employer national insurance contributions: individually, any one of those changes would be hard for a small business to absorb, but together they are too much for many small businesses across Hampshire. When a small business’s costs rise, that cost moves on to workers through stagnant wages, to customers through higher prices and to the business owners in lower profits. When the numbers simply cannot add up, the cost also moves on to local communities, through weaker local economies and hollowed out high streets. In Hampshire, where almost 98% of businesses are small businesses, that is felt by an entire county.

Small businesses cannot design their way around these tax changes. A big national chain can negotiate volume discounts, restructure its human resources or draw on a financial buffer; a beauty salon in Church Crookham or a care home in Ewshot cannot. That is why 35% of small firms say that they are planning to close or significantly scale back this year, and why these changes are, in plain terms, a jobs tax.

This matters because these are precisely the employers we need. The Government’s own research has warned that without urgent action, one in six young people could soon be a NEET—somebody not in education, employment or training. Hospitality, retail, personal care and customer service are the sectors facing the steepest rise in labour costs, yet they are the very sectors that traditionally give young people their first, vital experience in the world of work.

[Dr Danny Chambers (Winchester) (LD)]

A couple of weeks ago, I visited a business called Squeaky Clean run by Sam in Winchester. What was striking about that business was the number of students, young people and sixth-formers it employs, giving them their first job, getting them a CV and teaching them what it is like to work—to turn up on time, to take responsibility—before they go on to university and do other things. Sam told me that the single biggest difficulty she faces in keeping that business going is the rise in national insurance. Does my hon. Friend agree that we should be looking at this as a matter of urgency, not just for those businesses but for young people’s opportunities?

[Alex Brewer]

I wholeheartedly agree. That is the exact crux of the issue, and it is borne out in the data. The Bank of England decision-maker panel revealed that 46% of firms nationally have cut staff because of these changes, and that 20% have paid lower wages than planned. Nationally, small businesses account for 60% of private sector employment, so when they pull back it is not a footnote to the labour market; it is the labour market.

Nowhere is that clearer than in the hair and beauty sector. Kerry Mather has run KJM Salons in Fleet for 36 years, employing around 20 people including six apprenticeships, training a new generation in a key town centre location. In the past decade, apprenticeships in the UK hair and beauty industry have dropped from nearly 19,000 to 3,000. If we are not careful, soon there will be no apprenticeships left.