A rise in employers’ national insurance contributions in the Budget at the end of this month will increase pressure on agencies to axe jobs or cut incentive schemes, Blue Bay Travel chief executive Alistair Rowland has warned.
Rowland, who is chair of Abta, fears an increase in national insurance will come on top of a rise in the national living wage next April after 10% rises in minimum wage rates in 2023 and 2024.
Chancellor Rachel Reeves refused to rule out increasing employers’ national insurance contributions this week, insisting: “We need to close the gap between government spending and tax receipts.”
At the same time the Low Pay Commission, which advises ministers on minimum wage rates, forecasts a rise in the national living wage from £11.44 an hour to £11.61-£12.18 next April, with a central estimate of £11.89 – 4% up on the current rate.
Rowland noted “there have been two significant bumps in the national living wage in the last two years” and said: “It looks as though employers’ national insurance is going up on top.”
Speaking at a Travel Weekly Business Breakfast at the Travel Convention last week, Rowland warned: “Another significant rise in the national living wage will be difficult. It’s great for people [getting it], but where there is a strong incentive to sell, it will be throttled. The problem is we’re living in a bubble of strong sales and that is going to end.”
Rowland told Travel Weekly: “You’re trying to square a range of salaries, pushing them up at the bottom by 10% when you can perhaps only afford 3% in the middle.”
He noted: “We don’t know what the NI rise will be, but the government has to do something pretty material. So, with NI going up, we’ll probably have a 30% cost hike in just over two years and that is a real problem. All you can do is kill incentivisation or squeeze people. Particularly in agencies, we’re going to see heads lost.”
Rowland added: “It would be lovely to see agents on £15 an hour, but it would kill incentives.”
The national living wage is revised annually in April. It replaced the national minimum wage for workers aged 25 and over in 2016 and applies to those aged 21 and above.