Businesses across the West Midlands face mounting challenges following today’s Autumn Budget, which introduced significant changes to employer costs alongside new investment in skills.
From April 2025, employer National Insurance contributions will rise from 13.8% to 15%, and the threshold at which contributions begin will fall from £9,100 to £5,000. The Office for Budget Responsibility estimates this will increase payroll costs by around 2% on average, adding pressure to firms already grappling with rising energy bills and inflation. Salary sacrifice schemes will also see tighter tax-free allowances, reducing benefits for pensions and electric vehicle leases.
Employers face further cost increases as the National Living Wage climbs to £12.71 per hour for workers aged 21 and over, with substantial rises for younger employees. The rate for 18–20-year-olds rises to £10.85 per hour, while 16–17-year-olds and apprentices will earn £8 per hour. These changes benefit millions of workers but will significantly impact sectors such as hospitality, retail, and care across the West Midlands.
Business rates reform will also reshape costs. Relief for retail, hospitality, and leisure will fall from 75% to 40% in April 2025, before a new “slice” system with permanent lower multipliers for these sectors takes effect in 2026.
However, the Budget delivered positive news for skills development. The Government pledged £1.2 billion annually to boost training and apprenticeships, alongside reforms to the apprenticeship levy. The new Growth and Skills Levy will allow businesses greater flexibility to fund shorter, targeted training programmes, helping address critical skills gaps in digital, green technologies, and technical roles.
Rob Colbourne OBE, CEO of Independent Training Provider Performance Through People, said: “Employers want and need to invest in people, but under the right conditions and with appropriate support to do so. Skills funding is welcome, but cost pressures remain a serious concern. We have seen a huge drop off in employers recruiting staff or taking on apprentices since the previous budget, and unfortunately, these extra burdens will not encourage employers to change their views regarding investment.”