Next boss warns first jobs to become harder to find

Lord Wolfson, head of retail giant Next, stated that the tax adjustments announced in the budget would make it "harder for people to enter the labor market." He pointed out that the increase in National Insurance contributions paid by businesses would particularly hit the retail sector, meaning the "axe falls particularly heavily" on entry-level jobs.

Lord Wolfson called on the government to phase in the tax adjustments rather than introduce them all at once in April, or else jobs or working hours would have to be cut. However, a Treasury spokesperson said the budget measures were designed to "draw a line" and bring stability for businesses. In the October budget last year, the government raised the rate of National Insurance paid by employers and lowered the threshold at which they start paying it, from £9,100 to £5,000. Businesses also face a rise in the national living wage in April at twice the rate of inflation.

Lord Wolfson believes these changes will hit employers with a large number of low-paid or part-time staff the hardest. Next's wage bill is expected to increase by £70 million, which Lord Wolfson said would lead to a reduction in employee working hours - either by reducing staff numbers or by reducing the hours worked per employee. He called on the government to lower the National Insurance threshold over time, rather than giving employers just a few months' notice as in last October's budget. He pointed out that while the tax increase for a £60,000-a-year job was around 2%, it was around 6.5% for a part-time living wage worker. "So the axe falls particularly heavily on those entry-level, national living wage jobs, and that's where the pain will be felt most."

Lord Wolfson said this was not just a concern for retailers but for the economy as a whole. This year, Next received 13 applications for each Christmas job vacancy, a 50% increase from last year. He said: "I worry that it's going to get harder and harder for people to get into the labor market." "It's hard to imagine that such a large increase in the cost of entry-level jobs will have any other result than reducing employment opportunities." However, a Treasury spokesperson said that more than half of employers would either see their National Insurance bill reduced or "no change." They added that they were "creating the conditions for growth" through measures including limiting corporation tax and establishing a national wealth fund.

The National Insurance and minimum wage measures have drawn criticism from UK businesses, who argue that the changes go against the government’s aims to boost economic growth. Earlier this month, the British Chambers of Commerce said confidence had "plummeted" and that more than half of companies planned to raise prices in the next three months to cope with "the pressure of rising costs and taxes". Lord Wolfson wants the government to slow down the pace of tax increases. Last year, Next was one of the signatories to a letter from UK retailers to Chancellor Rachel Reeves calling for a rethink of the budget measures. The letter said that unemployment on the high street was "inevitable" and warned that prices would rise and shops would close. Next made more than £1 billion in profits last year, while other large retailers with large workforces, such as Tesco and Sainsbury's, have also reported huge profits. Lord Wolfson acknowledged that they were the "broad shoulders" that the Chancellor insisted must bear the burden of the taxes needed to rebuild public services. "The government does need to raise taxes. I'm not against lowering the National Insurance threshold in principle, but the problem is the speed at which it's happening, the lack of consultation."

Lord Wolfson also expressed concern about a new Workers' Rights Bill. The bill promises to give employees greater protection from unfair dismissal and "exploitative" zero-hour contracts, with workers able to request guaranteed hours contracts based on the hours they have worked over a period. But this could cause problems for retailers. "We offer extra hours to staff in the run-up to Christmas. If the legislation means that those hours have to be permanent on a contract, then we simply won't be able to do it, it will be impossible." He had some advice for the Chancellor in trying to boost growth and business confidence. Start in your own backyard. "The government has employed 100,000 more civil servants in the last five years." "We cannot continue to spend more than 40% of GDP on the public sector. It has to become more efficient, and if the government could commit to doing that, and deliver on it, then I think that would do more to boost business confidence than anything else."