Shake-up of NICs could drive engineers abroad

ENGINEERING companies are seriously considering leaving the country because of the Government's shake-up of National Insurance, announced in the Budget on Tuesday.

The Engineering Employers Federation said the increase in employers' National Insurance contributions (NICs) - which will rise from 10 to 12.2 per cent on all pay above pounds 210 a week - had prompted some members to consider moving elsewhere.

One well-known company, which did not wish to be named, has already warned Martin Taylor, the Barclays chief executive who is conducting a review of tax and benefits, that it might leave the country if his proposals were implemented.

The proposals for reform of NICs came in a report by Mr Taylor, published on the same day as the Budget, and will be implemented in April next year.

Under the Budget a progressive system of employers' contributions, rising in steps from 3 per cent at pounds 61 to 10 per cent at pounds 210, will be replaced by a single rate of 12.2 per cent on earnings above pounds 81 a week.

While low-paying employers will pay less for most employees paid less than pounds 450 a week, those paying higher wages will pay more. Wages of pounds 800 a week - common in the hi-tech engineering sector - would incur an extra pounds 7.84 in NICs.

David Yeandle, head of employment affairs at the EEF, said: "We see this predominantly as a bad thing for our sector. If it's going to be revenue- neutral for the Chancellor it is not going to be cost-neutral for the hi-tech industry. It is particularly difficult for those employing lots of high-paid people.

"I haven't seen anything to justify that this would provide more jobs. It is unlikely to create any new jobs in the engineering sector. We don't believe that companies make decisions about taking people on because of these relatively marginal effects."

The engineers said there was too little time to consult on the proposals, which were first revealed in February in an informal consultation by Mr Taylor.

The CBI has also warned that the effects on high-paying employers will be to impose an additional burden at a time when exports are already being squeezed by the strong pound.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test
Tour de France 2015: Twins Simon and Adam Yates have a mountain to climb during Tour of duty

Twins have a mountain to climb during Tour of duty

Yates brothers will target the steepest sections in bid to win a stage in France
John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy