• But businesses will face higher employment costs in terms of the above inflation rise in the NMW and the NLW, the higher rate of employer NICs and the lower NICs threshold for employers. [...] Likewise, increases in the NMW and the NLW benefit workers in the lowest wage jobs, which is largely in the two bottom deciles of the income distribution. [...] The right-hand side shows the proportion of the employee’s wage that they would have to pay and the left-hand side shows the percentage increase in employer’s tax bill relative to the old national insurance rate and thresholds. [...] (22) NIESR Response to the Autumn 2024 Budget Figure 8: The impact of the new Employer National Insurance Rate and Thresholds Source: NIESR Calculations and Survey of Personal Incomes The changes to employers’ NIC, combined with the rise in NMW/NLW and the new policies in Employment Rights Bill, will represent substantial new costs to SMEs (Small and medium sized enterprises) which are already str. [...] However, these deals seem to be structurally the same as the ones agreed by the previous government, which is to say with a substantial degree of HM Treasury oversight and the delegation of responsibility without the requisite transfers of resources and decision-making powers.
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Table of Contents
- Contents 2
- Foreword 3
- Main Points 4
- Background 5
- Monica George Michail Associate Economist 5
- Figure 1 UK Productivity as measured by output per hour worked has fallen behind OECD economies since 2008 5
- Figure 2 UK Public Investment has been below G7 average for most of the past decade 6
- Fiscal Space 7
- Fergus Jimenez-England Associate Economist 7
- Table 1 Coverage of alternative definitions of debt 8
- Figure 3 Additional headroom relative to PSND ex BoE billion 9
- Figure 4 OBR Debt to GDP forecast under different definitions of debt 10
- Tax Changes 11
- Ed Cornforth Economist 11
- Figure 5 Effect of Employers NIC and Income Tax on key variables 13
- Figure 6 Effect of Employers NIC and Income Tax on Real Person Disposable Income 14
- Table 2 Coverage of income tax rates 15
- Spending Changes 17
- Hailey Low Associate Economist 17
- Household Finances and Living Standards 19
- Dr Eliza da Silva Gomes Economist 19
- First of all 21
- Figure 7 Counterfactuals on the changes to the Income Tax Bands 21
- Second 22
- Figure 8 The impact of the new Employer National Insurance Rate and Thresholds 23
- Regional Inequalities 24
- Professor Adrian Pabst Deputy Director for Public Policy 24
- First 25
- Second 25
- Third 25
- References 27
- National Institute UK Economic Outlook 27
- National Institute of Economic and Social Research 27
- National Institute Economic Review 27
- NIESR Occasional Paper LXI 27
- Cambridge Working Papers in Economics 27
- Invest 2035 the UKs Modern Industrial Strategy 27
- The Politics of Productivity institutions governance and policy 28
- Office for Budget Responsibility 28
- The Financial Times 28
- Eastern Economic Journal 43 28
