Businesses in Kent have had it tough in recent years, with the pandemic and soaring utility bills among the challenges crippling small traders across the county.

And from next month they face the impact of a punishing tax hike one pub boss says will be “financially worse than Covid” – with all of us set to feel the pinch, as Chris Britcher reports…

In her first Budget in October, Rachel Reeves delivered a bombshell that “pulled the carpet from under” businesses across Kent.

Among a raft of controversial measures, the Labour Chancellor revealed she was hiking the amount employers would pay in National Insurance contributions (NICs) from April 1.

The announcement came at a time when many businesses had found themselves on an even keel after fighting off one crisis after another - and its impact should not be underestimated.

For Philip Thorley, who runs 18 pubs and hotels across Thanet through his Thorley Taverns chain, it will add £8,000 a week to his company’s wage bill.

“It is bonkers for a little pub company,” he said. “I think financially, it's going to be worse than Covid.

“And to be honest about it, we're not sure how we're going to get through it - but we have to get through.

“We've been going 50 years, and I'm hoping that we're going to be here for another 50 years.

“However, £8,000 a week is an inordinate amount of money.

“We've been given the worst budget since I've been in business; the worst budget for young people, the worst budget for jobs and the worst budget for retail and hospitality.”

But how will the increase impact you, if you’re not an employer?

Well, to make up the extra money now needed, we can expect prices to rise, the cost of services to increase, more uncertainty in our workplaces, a slowdown in recruitment and a slamming on the brakes of investment and expansion plans. None of which is likely to help ease fears of a recession - compounded by the unexpected shrinking in the UK economy, announced last week, which dipped by 0.1% in January.

In short, we will all feel the impact. The question is, if further cuts are in the offing, just how seismic will that be?

The National Insurance contributions being increased are paid by employers - not employees - as a tax which goes into government coffers. There are two strands to the upcoming increase. Firstly, there’s a rise in what’s known as ‘secondary class 1’ NICs. They are currently paid on the amount by which the employee’s earnings exceed a threshold of £9,100 a year. Currently, that rate is paid at 13.8%.

As of April 1, that rises to 15%, while the threshold at which employers become liable will drop from £9,100 to £5,000, thus bringing many - often part-time employees - into the equation and increasing the costs of all other staff.

As an example, a typical employee earning £25,000 will cost each employer a little over £800 more a year due to the increases in both the threshold and tax rate. You can see how the costs mount up for those with bigger payrolls.

The government has upped the level in order to raise a forecast £23.8-25.7 billion over the next five years. It neatly sidestepped a pre-election promise not to increase taxes for workers - hitting employers in the pocket instead.

Add to that, both the National Living Wage and National Minimum Wage are increasing too. The icing on the cake is also an increase in statutory sick pay.

The impact has been profound for many already. Some, already facing slim profit margins, have already thrown in the towel. Many others have slowed recruitment plans given the extra burden that awaits them.

Bernie Sullivan, who manages Cavells restaurant on Folkestone’s Harbour Arm, says she will have to carefully consider staffing numbers.

“It will absolutely have an impact on us and there’s no two ways about it,” said the 63-year-old.

“You can only sell what you can sell though, and being in a cost-of-living crisis people aren’t going to spend any more than they can afford to.

“So I think it will affect the number of staff we can employ.

“We’re on winter numbers at the moment so it’s not high, but when it comes to the summer we are going to have to be looking at who we can hire.”

Alex Veitch, director of policy at the British Chambers of Commerce, says firms are already

“sitting on a powder keg of costs”.

“Most are saying they will have to raise prices and reconsider recruitment plans,” he said.

“That’s unlikely to create an environment that fosters growth, the key priority for government. Ministers need to read the room and recognise the impact this tax hike will have.”

In a poll it conducted, 82% of firms questioned said the National Insurance rise would have an impact, with more than half saying it will impact prices or recruitment plans.

It is a view echoed by Tudor Price, the chief executive of the Kent Invicta Chamber.

He told KentOnline: “The majority of businesses that we have spoken to have all said this increase will have a significant impact on their hiring of staff and their short-term investment plans.

“Without a corresponding increase in infrastructure commitment and a reduction in inflation, I fear the much-promised economic growth will be nothing more than a government pipe dream.”

While not directly impacted by the rise in NICs, Matthew Brown – who runs Tee Shirt Island in Sheerness - is among the one-man bands who will feel the knock-on effect.

“If companies are going to be cutting back then that will affect local businesses,” he said.

“It will be more than just employers who feel the increase because it will impact one-man operations.

“I work with gyms, takeaways and businesses which buy workwear for staff, so the amount they order is based on their staffing levels.

“If they’re going to be cut and there’s going to be less recruitment then that will be noticed business to business.

“People are normally looking to replace uniforms in early spring and I have already noticed there has been a slow down, and certainly things are quieter this year.”

For companies such as bus firm Stagecoach - which continues to see a 15% reduction in its passenger numbers since the pandemic, the impact has forced it to look at how to reduce spending to cover its additional tax burden.

It has seen costs increase by 38% - which includes the NICs rise - over the last five years through hikes in energy costs, fuel, insurance, salaries and material costs.

And that, inevitably, has meant some heavily loss-making services have been cut - while recruitment is frozen and staff leaving the company are not always being replaced.

Stagecoach South East managing director Joel Mitchell said: “We have fought tooth and nail to make sure our income is covering our operating costs. But our operating costs have increased exponentially since Covid.

“We're back at about 85% of pre-Covid passengers numbers, but 15% is still quite a significant hole to fill.

“So we have been forced to take lots of painful and brave decisions. We get through that, and now we’ve effectively been told we have to add another £1.3m to our cost base.

“What's happened as a consequence of the NI uplift is we have had to deregister a number of services.”

In other words, cancel them.

Which has a broader impact. Stagecoach operates the bulk of its services on a commercial basis. If some routes make a loss, but others make a profit, then, on balance, the loss-makers will be covered.

But such is the financial pinch now, it’s had to drop some of the worst performers. Which often means Kent County Council is obliged to pick up the slack and lay on a service which it opens up to bus operators to tender for. Which means Stagecoach often finds itself back operating the loss-making route, albeit this time KCC making up the shortfall. Bizarre, but at least it keeps the buses running.

However, taxpayer-funded KCC, which itself is under enormous financial strain, has been paying for such services by dipping into the Bus Service Improvement Plan (BSIP) fund. Set up under Boris Johnson during his time as prime minister, the fund is designed to help provide innovative promotions and invest in bus infrastructure. Instead, it is simply papering over the cracks in the system.

The Stagecoach boss adds: “The BSIP is there to grow bus use for the long term and we want to be part of that growth agenda.

“What I don’t want is the community we serve thinking, ‘oh, they’re all about generating profit’. Honestly, I'm just trying to make sure that we can cover our operating costs and continue to provide a service.”

The increase in the minimum wage - which will rise from £11.44 to £12.21 for over-21s and up from £8.60 to £10 for those aged 18-20 - will also put pressure on the part-time sector.

Philip Thorley says this will be keenly felt by those in the hospitality industry.

“The 16 to 17-year-olds, who are the younger people who join our business and start with us, their rate is going up 18%,” he said.

“I'm sure that you would like your wages to go up 18%. I'd love my wages to go up, my own personal wages. It doesn't work that way. And this is only going to fuel inflation. And it's going to mean less jobs and less people in employment. It really is a struggle.

“We've got 400 people who work with us. And we look to give the customers the best service that we can. However, bills have got to be paid, and HMRC is somebody who doesn't wait.

“So you've got to make sure that we balance the books. So I think there are going to be fewer hours for the team members we have.

“And I think that we will look to be doing less part-time people, therefore fewer younger people, and looking to try and consolidate those into full-time jobs because it becomes more cost-efficient to anybody in our type of operation, not just Thorley Taverns.”

The British Retail Consortium recently said it believed one in 10 of the more than 1.5m part-time jobs in the retail sector - some 160,000 roles - are at risk as a consequence of the increases over the next three years.

Helen Dickinson, its chief executive, added: “Retailers face a mountain of costs from the Budget and while they continue to absorb costs where they can, higher prices and job losses are inevitable.”

It comes on the back of the myriad challenges the high street has faced in recent years which have seen many up sticks or disappear altogether.

The voices raising concerns have so far met with little government give.

The Chancellor has vowed it will “never have to deliver a Budget like this again” before going on to admit “it’s not going to be easy for businesses” but added: “We made a commitment during the general election that we wouldn’t increase taxes on working people, because over the last few years it has been working people that have had to bear the brunt of tax increases.”

The impact on working people, however, will be felt, almost inevitably, in our pockets.