Workers Face Biggest Job Cuts in a Decade as Reeves’s £25bn Tax Plan Looms

Workers are bracing for some of the steepest job losses in a decade as businesses prepare to shed staff ahead of Rachel Reeves’s planned £25bn tax hike.

A survey by the Chartered Institute of Personnel and Development (CIPD) revealed that a quarter of businesses are planning redundancies—the highest proportion in 10 years, excluding the peak of the pandemic.

In contrast, public sector employers anticipate an easier time hiring following a series of pay increases funded by tax rises introduced by the Chancellor. Meanwhile, a separate study indicated that small business confidence has plummeted to a five-year low.

The findings have fueled criticism from the Conservatives, who argue that Reeves’s budget is stifling economic growth.

Andrew Griffith, the shadow business secretary, said: “This latest research adds to a growing body of evidence showing that business confidence is collapsing, and a significant number of businesses are set to cut jobs or reduce hiring.

“A change in direction from the Government is long overdue. You can’t claim to support growth while imposing a jobs tax followed by the union-driven, job-killing Employment Bill.”

Peter Cheese, chief executive of the CIPD, described the trends as concerning, warning that retail and hospitality sectors will be among the hardest hit when the Chancellor’s £25bn National Insurance changes take effect in April.

“These are the most significant declines in employer sentiment we’ve seen in the past decade, outside of the pandemic,” he said. “Employer confidence has been shaken by planned increases in employment costs, and the job market is moving in the wrong direction.”

Under the proposed changes, the employer National Insurance rate will rise from 13.8% to 15%, while the threshold at which it applies will be lowered from £9,100 to £5,000. In addition, the National Living Wage is set to increase by 6.7% to £12.21 per hour in April.

Faced with rising costs, businesses are not only preparing layoffs but also scaling back hiring plans.

One in three companies are either cutting jobs or reducing hiring, while 42% are increasing prices to offset higher taxes, and a quarter are scrapping investment or expansion plans.