In yesterday’s Budget, presented by Chancellor of the Exchequer Rachel Reeves in parliament, the chancellor confirmed that employer national insurance contributions would rise 1.2 percentage points to 15%.

The threshold at which firms start paying national insurance was also cut to £5,000 until 5^th April 2028, to rise with the Consumer Prices Index thereafter, with employment allowance rising to £10,500 and the £100,000 employment allowance eligibility threshold removed.

However, national insurance paid by employees, income tax, VAT and corporation tax were frozen for the duration of the parliament.

The rise in employer national insurance caused some concerns about the potential impact on smaller business in particular and the increased cost of employment.

Jane Frost, chief executive at the Market Research Society, said: “We are pleased that the budget did not scare the markets; we need some stability right now.

“However, we are deeply concerned about the impact of the raise in employer national insurance on our overwhelmingly small business base in the research sector. Our sector is dependent on skilled people and the increased cost of employment will, I am sure, have a dampening impact on growth.”

Paul Bainsfair, director general at the Institute of Practitioners in Advertising, said: “The change to employer national insurance contributions represents a very significant increase in the cost base of agencies and threatens their ability to facilitate the growth the government says it is prioritising.

“More broadly, agencies stand or fall on their talent. Moreover, shifts in employee rights, will significantly affect how agencies recruit, retain, and nurture the creative minds that are essential to our sector’s success.”

Bainsfair also said that capital gains tax (CGT) rises in the Budget could also have a negative impact. 

“The chancellor also announced increases in CGT and the tax paid on carried interest. We are concerned that this may lead to a reduction in appetite for investment in agency businesses, whether by individuals or by financial sponsors,” he explained. 

“We just have to hope that this short-term pain will, as the chancellor suggested, ultimately unlock vital long-term growth for the UK economy.”

The Budget also saw the Department for Science, Innovation and Technology (DSIT) settlement provide the department with funding of £15.1bn in 2025/26, equivalent to an annual average real-terms growth rate of 6.5% from 2023/24.

The DSIT funding included £13.9bn to invest in research and development, including at least £6.1bn for core research, and £2.7bn for association to EU research programmes and partnerships and the costs of the Horizon Europe guarantee scheme.

Other promises included creating a new National Data Library to access to public data assets, which the Budget said would give researchers and businesses insights “that will drive growth and transform people’s quality of life through better public services and cutting-edge innovation”.

The government is also supporting commercialisation of university research by providing at least £40m over five years for proof-of-concept funding and improvements to support for researchers setting up spin-out firms.

Polling from Savanta in the aftermath of the budget showed 41% of the public supported the budget, with 27% opposing and 27% saying they neither support nor oppose.

Increased spending in the NHS ( 71%) and raising the national minimum wage ( 69%) were the most popular measures in the Budget, followed by extending the fuel duty freeze ( 63% support), abolishing the non-dom regime ( 56%), scrapping the VAT exemption for private schools ( 52%) and removing the freeze on income tax thresholds from 2028 ( 44%).

The least popular announcement of those measured was increasing the single fare bus cap from £2 to £3 ( 52% oppose), followed by increasing employer national insurance contributions ( 33% oppose).