SNIPEF

New employer tax increase threatens stability of plumbing and heating industry, jeopardising skills investment and job creation in an already fragile construction sector.

Chancellor Rachel Reeves's announcement of a rise in employer National Insurance from 13.8% to 15%, alongside a lowered threshold for NI payments, has drawn strong criticism from the UK's plumbing and heating industry.

While the Employment Allowance increase from £5,000 to £10,500 will relieve some small businesses, the Scottish and Northern Ireland Plumbing Employers' Federation (SNIPEF) warns that the overall impact of these changes will further burden an already strained construction sector, threatening existing jobs, job creation and hindering essential investments in skills and productivity.

"The plumbing and heating industry is experiencing steady demand, but ongoing challenges, from rising material and labour costs to frequent payment delays, are destabilising our members' ability to thrive and grow," said Fiona Hodgson, Chief Executive of SNIPEF.

"While we welcome the Employment Allowance increase for the smallest employers, this increase in employer National Insurance, particularly with a lowered threshold, severely limits crucial investments in equipment, training and development, the very goals Labour's own manifesto pledged to support."

SNIPEF’s soon-to-be-published State of Trade survey indicates that while 81% of members remain confident in their industry's strength, only 32% feel optimistic about the broader UK economy.

"Our members are committed to supporting their communities and delivering high-quality services," Hodgson continued. "But with rising costs, payment delays and now this added tax burden, any potential for business growth is under threat. We urge the Government to reconsider its approach, as imposing these taxes now only increases pressure on an already fragile construction sector."

The recent liquidations of major construction firms, including ISG and housebuilder Stewart Milne, underscore the sector's vulnerability. "Clients are demanding price reductions while supply chain costs are climbing," Hodgson noted. "This squeeze on margins is increasing the risk of further liquidations."

SNIPEF argues that further tax hikes on small businesses won't boost productivity but will instead drain resources that could be used for training, innovation and job creation. "This isn't support for industry; it's a hindrance," Hodgson added. "We need smart, supportive policies that empower small businesses, not blanket tax measures that sap their potential. The government should be looking to incentivise growth, not curtail it."

SNIPEF calls on the government to consider alternative solutions, such as further support and incentives for training and professional development, which would allow small businesses to continue delivering essential services without compromising growth and innovation.

Recent insights from the Institute for Fiscal Studies support SNIPEF's concerns, highlighting that additional taxation on companies can weaken their ability to invest in productivity and workforce development, both crucial for economic recovery and long-term growth.