National Insurance changes would result in 5,500+ jobs for South West manufacturers

By Anita Jaynes on January 01, 2015

More than 5,500 new manufacturing jobs could be created in the South West if manufacturers were given a temporary reduction in employers’ National Insurance when they take on new workers.

The figures come from accountancy and business advisory firm BDO LLP in Bristol, which is calling on political parties to show their support to manufacturers as we enter the final furlong to May’s General Election.

The new BDO analysis found that 5,772 new jobs could be created in the South West during the course of the next parliament if employers’ National Insurance, known to be a real barrier for taking on workers and often referred to as the ‘jobs tax’, was temporarily reduced for manufacturers.

The policy recommendation forms part of the BDO Mid-Market Manifesto, which lobbies for specific support for medium-sized businesses that are currently under-valued and overlooked by government policy.

 Medium-sized manufacturers alone would create over a quarter (1,556) of these new jobs if the policy was taken up by a potential government.

Paul Falvey, tax partner and head of manufacturing for BDO LLP in the South West, said: “Manufacturing is a vital sector for the region and the UK as a whole, and it is the medium-sized businesses that provide us with the biggest untapped potential in both domestic and international markets.”

In the South West, medium-sized manufacturers already employ more than 110,000 people, generate £18bn in revenue and contribute £833m to the region’s export value.

By assisting local businesses that are most likely to be exporters or supply exporters, introducing a temporary reduction in employers’ National Insurance for the manufacturing sector over the next four years will support the government’s target of doubling exports by 2020.

In addition, the cost to the Exchequer – estimated at £2,600 per annum per worker based on an average wage of £26,500 – when offset by the increased income tax and employees National Insurance, would result in a net Exchequer benefit.

In the Autumn Statement at the beginning of December, the Chancellor announced the lifting of National Insurance for employers taking on apprentices under the age of 25.

Paul Falvey added: “The Chancellor has already shown a willingness to use targeted national insurance reliefs as a way of stimulating employment. The apprentices move was a step in the right direction, but it does not go far enough. This policy could singlehandedly benefit manufacturing GDP, job creation, export levels and the Treasury’s coffers.”

Pictured above: Paul Falvey, tax partner and head of manufacturing for BDO LLP in the South West

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