Employer National Insurance Contributions: Small Businesses in Hampshire

Debate between Alex Brewer and Jim Shannon

Wednesday 2nd September 2026 Westminster Hall

[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.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for securing this debate and I will echo both what she has said and what the hon. Member for Winchester (Dr Chambers) said in his intervention, because the situation is the same in Northern Ireland.

According to the Northern Ireland inter-departmental business register, small businesses and microbusinesses make up the vast majority—about 90%—of Northern Ireland’s local economy, with almost 83,000 registered businesses employing fewer than 10 people. These businesses are not faceless conglomerates; they are the family-run corner shops, local butchers and small builders across my constituency and the constituency of the hon. Member for North East Hampshire (Alex Brewer).

Echoing the hon. Lady’s opinion, the Federation of Small Businesses Northern Ireland has explicitly warned that these surging costs are forcing independent retailers to slash staff hours, cut back opening times and put growth on ice. Does she agree that this issue lies on the shoulders of Government and of the Minister in particular, and that this anti-business policy must stop before it pushes vital high street traders to the wall?

[Alex Brewer]

I thank the hon. Member for his intervention and I agree that this is a matter for Government, which, of course, is why I am raising it today.

The pressure compounds, of course, where a workforce is already stretched. Vehicle repair already loses around 1,700 workers a year. The Institute of the Motor Industry says:

“Protecting that workforce is not just a matter for bodyshops and garages—it is a matter for insurers, fleet operators, and ultimately for every driver who needs their vehicle repaired.”

Foster and Heanes, a name that is well known in North East Hampshire for providing MOTs and repairs, sits squarely in the path of that shortfall. Where there are no staff available to repair a vehicle, the consequences ripple out to every tradesperson who needs a van back on the road and every local supply chain that depends on vehicles moving on time. In a constituency with limited bus infrastructure, the school run is also affected, because for many families there is no alternative but to use a car.

As my hon. Friend the Member for Winchester (Dr Chambers) and the hon. Member for Strangford (Jim Shannon) have said, such business challenges are of course felt across the country. Some 69% of businesses cite employer national insurance contributions as one of the top three cost threats to UK labour market competitiveness, while business confidence has fallen—even since the market turmoil of autumn 2022, which is a really damning indictment of this policy. A quarter of firms cut back investment in the very quarter that these changes took effect, making it no surprise that growth under this Government has never once crept above 0.6%.

The policy is just so hard to understand given the rhetoric used by this Government. There is talk of growth, talk of apprenticeships and talk of opportunities for young people, but the action seems to be the opposite—fewer jobs, fewer apprenticeships, less business investment and an economy that continues to stagnate. Small business owners need to understand how the Government can justify this policy.

Nowhere is the policy harder to defend than in health and social care. This year alone, independent care providers have been billed an extra £940 million. Ministers point to additional social care funding, but for providers on the ground that funding is little more than a consolation prize, because the Government voted down every single Lib Dem amendment tabled in the House of Lords to exempt care and early years providers from this rise. It has landed on a sector that is already in profound crisis and that simply cannot reduce its workforce to cope.

Hundreds of thousands of people are currently waiting for care, many of them stranded in hospital beds simply because the care they need is not available, which piles more strain on to the NHS. Liberal Democrat analysis found that almost 900,000 people had their request for care denied in the last financial year, while—tragically—a further 6,000 people died while waiting for their care to be approved. This policy does not simply squeeze care providers’ margins; it deepens a crisis with a real human cost.

That gets to the very heart of the matter. At the centre of this situation, as local business owners in North East Hampshire have told me, are people. Good employers who pay their staff a fair wage, who train and invest in their teams and who contribute to the communities in which they operate are being squeezed to breaking point.

Having barely recovered from the covid years, service and retail businesses no longer have the financial buffers they once had. That means their staff lose out not just on a pay rise but on a Christmas party or a team training day, or perhaps their equipment is not replaced as regularly or they do not get a bonus. Whatever the consequence, it is people who are impacted—the ones who this Government claim they want to support.

Hampshire’s experience and the national picture are one and the same story, but none of this was inevitable. The Office for Budget Responsibility itself says that firms will pass on 60% of the higher costs, whether through reduced wages or higher prices. Coupled with five consecutive years of falling living standards, the changes to NICs are nothing short of regressive.

There is no doubt that our public services need funding and that our country’s infrastructure needs urgent repair, and I am the first to call for those things, but there is a fair way to do this—and one that will not strangle the UK’s economic growth. The Government must focus on taxing those with the broadest shoulders so that they contribute more through a higher digital services tax, on overhauling the broken business rates system, on ensuring that enormous multinational corporations are paying their fair share for doing business in the UK, and on reversing the Conservatives’ banking tax cuts.

Positive change is possible. The Government’s steps towards cross-party discussions on social care and the 20% cut in business rates for pubs, clubs and music venues are welcome, but we must go further. Any relief to those sectors cannot leave NICs off the table. Today and every day, I represent the brilliant North East Hampshire business community. Small businesses are the engine room of the British economy, so I call on the Government to give them the certainty they need to invest, grow and create jobs. Our businesses should be thriving, not barely surviving.

Early Years Funding: Hampshire

Debate between Alex Brewer and Jim Shannon

Wednesday 1st July 2026 Westminster Hall

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

I beg to move,

That this House has considered the adequacy of early years funding in Hampshire.

It is an honour to serve with you in the Chair, Sir Alec. A Hampshire nursery manager recently told me:

“Sometimes the funding arrives so late that we are genuinely worried about making wages.”

That sentence has stayed with me, because it captures something that the national conversation about “free childcare” too often misses. The question is not simply whether Hampshire has enough childcare places on paper. It is also whether every family can access suitable, affordable and high-quality early education and childcare when they actually need it and whether providers have the funding and workforce to deliver that sustainably. Those are two very different questions, and today I want to address them both.

Let us be clear about the scale of the pressure that the sector is under. Providers are being hammered by rising costs: increased employer national insurance contributions, rising energy costs just to keep the lights on, business rates and more. One nursery provider in my constituency of North East Hampshire told me that their liability insurance had risen by 19% this year alone, and that was on top of a 59% jump in business rates.

Department for Education analysis published in May found that on average providers took in just £1.01 for every £1 that they spent in 2025, and nearly half of providers reported income that fell short of covering their costs. I am aware that one nursery in my constituency is required to subsidise the Government’s funded offer by more than £51,000 in this academic year alone. It cannot be right that a sector that is already operating on wafer-thin margins is left to absorb more and more tax rises.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for bringing this matter forward. She is right to highlight the funding shortfall, which is present across the whole United Kingdom of Great Britain and Northern Ireland. It is forcing nurseries to close, driving up childcare costs and stopping parents returning to the workforce. Does she agree that the Government need to make this issue a priority in education to ensure that children are educated and parents can cope with the pressures that they are under?

[Alex Brewer]

Yes, I absolutely agree; that is a precise summary of the current position. When we think of early years, most of us automatically think of nurseries, but in many areas of the country, and especially North East Hampshire, many families rely on local childminders. Earlier this month, a constituent of mine, Lorna, told me that after almost 26 years of running her childminding business, she must close it because of mounting financial pressures. She has loved the job, but the lack of any promise of a better financial future has left her with no choice.

Every ambition that we hold for this system—more places, better outcomes and proper support for children with additional needs—depends on a stable, skilled and well-supported workforce. Parents do not use the language of workforce policy, but they feel its consequences all the same, including in high staff turnover, longer waiting lists, reduced flexibility and the particular difficulty of finding a place for a child with additional needs.

A Hampshire nursery manager put the underlying cause to me plainly: rising costs have not come with a matched uplift in the funding rate. Staffing alone accounts for three quarters of costs in the early years sector. That leaves early years settings particularly exposed to sudden changes, such as the increase in employer national insurance contributions. Providers cannot compete for the experienced senior staff necessary to deliver high-quality support, and high staff turnover leads to higher training costs.

Every parent stuck on a waiting list is living with the downstream consequence of a workforce crisis that starts with underfunding, and Hampshire reflects many of the challenges in microcosm. It is a large county, spanning urban, rural and coastal communities. Hampshire county council’s childcare sufficiency assessment points to the same challenges: expanding supply to meet the extended 30-hour entitlement; tackling recruitment and retention; and ensuring that rising demand does not squeeze out children with special educational needs or from disadvantaged backgrounds—the very children who stand to gain the most from a good-quality early years setting.

Free childcare makes for a great headline, but it has to be deliverable. As of September 2025, the county council projected that Hampshire would need an additional 2,100 childcare places in wards where supply is already limited just to meet the promise of 30 hours a week. This promise is not all it is made out to be. The figure of 30 hours is based on term-time care only, so for those parents who work full-time, that is spread out over 52 weeks, not 38. The rate for three and four-year-olds that is paid to settings is lower than the cost to provide the service, so those paying for additional hours are, in effect, subsidising the free provision. For those families who are barely getting by, with high living costs and stagnant wages for their own work, it is often more expensive for both parents to work. That is not good for our economy.

As with any business, cash flow is key, and providers across my North East Hampshire constituency tell me that they are paid in arrears, with funding for a month’s care landing in the last three days of that same month, compared with other counties that pay before the month even starts. So Hampshire nurseries are covering an entire month of wages, rent and bills with private fees. When that is combined with low or no profit margins, it sets the scene for instability and uncertainty. Young children, working parents and childcare providers all need stability in the sector to thrive, but the circumstances are far from ideal for that.

Nowhere is the funding gap starker than for children with special educational needs and disabilities. Before entering this House, I served as a school governor and ran a charity supporting children and young adults with Down’s syndrome and their families, so this is an issue I have seen up close from both sides of the school gate. Providers tell me that the pathway to secure support is long and difficult to navigate. By the time a child is identified, their needs are often already very high.

What funding does arrive frequently pays for only an enhanced ratio, which is no substitute for the one-to-one specialist care that many children need, and staff often lack the specialist training required. Indeed, in my previous line of work, it was the charity that stepped in to provide the training—a service with the uncertainty of being funded solely through donations and simply not available everywhere in the country. A child’s future should not be a postcode lottery.

Investing in our future generations is the best investment we can make, for them, for families and for society. That is why Liberal Democrats are calling for early years providers to be exempted from the rise in employer national insurance contributions. Hampshire’s early years providers are not asking for handouts; they are asking for the funding that was promised to arrive, to be enough and to be on time. A place on a spreadsheet is not the same as a place a family can use. A free hour that no provider can afford to deliver is not free at all. Our children’s futures, and those caring for them, deserve nothing less.