Next boss warns first jobs to become harder to find

Lord Wolfson, the boss of retail giant Next, has stated that the tax changes announced in the budget will make it "harder for people to get into the workforce." He believes the rise in National Insurance contributions paid by businesses will particularly hit the retail sector, meaning the "axe falls particularly heavily" on entry-level jobs.

Lord Wolfson is calling for the government to phase in the tax changes rather than introduce them all at once in April, or jobs or hours will have to be cut. However, a Treasury spokesperson said the budget measures were designed to "draw a line" and provide stability for businesses.

In the budget last October, the government raised the rate of employer National Insurance (NI) contributions from April, while also lowering the threshold at which employers start paying it from £9,100 to £5,000. In addition, businesses are also facing a rise in the national living wage in April, which is twice the rate of inflation. Lord Wolfson pointed out that 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 staff working hours, either through reducing staff numbers or reducing the hours worked by each member of staff. He has called on the government to gradually lower the threshold for National Insurance contributions, rather than giving employers just a few months' notice as in last October's budget. He also pointed out that for a job paying £60,000 a year, the tax increase is about 2%, while for a part-time living wage worker, the increase is about 6.5%. He said: "So the axe falls particularly heavily on those entry-level, national living wage jobs, and that's where the pain is felt the most."

Lord Wolfson said this was not just a concern for retailers, but for the whole economy. This year, Next had 13 applications for every Christmas job vacancy, up 50% on last year. He said: "I worry that it will become increasingly difficult for people to get into the workforce. It's hard to imagine that such a big increase in the cost of entry-level jobs will have any other result than fewer jobs." However, a Treasury spokesperson said that more than half of employers will see their National Insurance bills reduced or "no change". They added that they were "creating" the conditions for economic growth through measures including capping corporation tax and establishing a national wealth fund.

The National Insurance and minimum wage measures have drawn criticism from UK businesses, who argue the changes are counter to the government’s stated aim of boosting economic growth. Earlier this month, the British Chambers of Commerce said confidence had "plummeted" and that more than half of firms plan to raise prices in the next three months to cope with a "pressure cooker of cost and tax increases". Last year, Next was among the signatories to a letter from UK retailers to the Chancellor, Rachel Reeves, calling for a rethink on the budget measures. The letter said unemployment on the high street was "inevitable" and warned that prices would go up and shops would close.

Next made over £1 billion in profit last year, while other large retailers with large workforces, such as Tesco and Sainsbury's, have also made huge profits. Lord Wolfson acknowledged they were the "broad shoulders" that the Chancellor insists must bear the tax burden needed to rebuild public services. He said: "The government does need to raise taxes. I’m not against lowering the threshold for National Insurance in principle, but the problem is the speed at which it's happening, and the lack of consultation."

Lord Wolfson also raised concerns about a new Workers' Rights Bill. The bill promises greater protections for staff against unfair dismissal and "exploitative" zero-hours contracts, where staff can demand guaranteed hours contracts based on the amount of time they have worked over a period. But this could create problems for retailers. "We offer staff extra hours in the run-up to Christmas. If the legislation means those hours have to be contractual, then we simply won't be able to do it, it will be impossible."

He had some advice for the Chancellor in her efforts to boost economic growth and business confidence: start in your own backyard. "Over the last five years, the government has employed 100,000 civil servants. 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 it – then I think that would do more to improve business confidence than anything else."