CARE homes across Scotland could be forced to shut their doors as a result of the Budget hike in employers’ National Insurance (NI) payments, it has been warned.

Dr Donald Macaskill, chief executive of Scottish Care, said what was needed was better investment in the care workforce “rather than yet more demands being placed upon ­employers which put at risk the very security of jobs in the care sector”.

“We are concerned that Scotland’s many care organisations will struggle to pay the extra payments and may in turn end up going out of business,” he said.

Jobs could also be lost in the ­hospitality and tourism industries, according to sector leaders, with some businesses having to find over £100,000 extra a year for the tax on top of rising costs.

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Despite Labour’s promise to ­protect “working people”, UK ­Chancellor ­Rachel Reeves has now admitted that the tax rises in last week’s Budget are likely to reduce wages and lead to job losses.

The Office for Budget ­Responsibility (OBR) has forecast that by 2026-27, around 76% of the total cost of the increase will be passed on through lower real wages – a ­combination of a squeeze on pay rises and increased prices.

The NI hike to 15% from 13.8% could also lead to the equivalent of around 50,000 average-hour jobs ­being lost, the watchdog said.

Paul Johnson, head of the independent think tank the Institute for Fiscal Studies, said it was a £25 billion tax rise “proportionally hitting harder those employing lower paid workers”.

Music promoter and night club ­owner Donald MacLeod, who is ­facing an increase of more than £100,000 in NI payments for his 150 employees, said the hike would also badly hit hospitality and tourism ­industries.

“I really fear this will force the ­shutters down on many who are ­already tap dancing on the edge of the abyss, especially those small but fragile, hospitality businesses and nighttime economy operators,” he said.

“The changes work out at another £615 per employee and that is more than £100,000 a year that we will need to absorb that in the same way. That is on top of rises in supply and energy costs, inflation so this is not a good Budget.”

MacLeod called on the Scottish Government to use its Budget to pass on the rates relief for businesses which is in place south of the Border.

“It’s about time the Scottish Government gave the hospitality, tourism and night time economy sectors the rates relief they have been denied for two years in a row,” he said.

Stephen Montgomery, spokesperson for the Scottish ­Hospitality Group (SHG), which represents the largest group of independent, family-owned hospitality businesses in ­Scotland, said the Budget was “a blow” to ­businesses across the ­country, but particularly concerning for the ­hospitality industry.

“It is estimated that the ­Chancellor’s plans will add 10% to operating costs and it could certainly cost jobs,” he said.

Montgomery (below) added that the NI hike plus other measures would see most of the group’s members paying an additional £160,000 a year – even before the 6.7% and 16% increase in the national minimum wage is ­included or added costs implementing the Employment Rights Bill.

“For the larger businesses in our group, those with 700-plus ­employees, it will add a staggering £3m of costs when you factor in the wage ­increase,” he said.

Montgomery added: “SHG cannot see how this budget addresses the Government’s ambitions of a ‘dynamic, modern and growing economy’.

“The effect on hospitality – a key sector to growing the economy – will be to stifle growth and investment, the very opposite of what has been promised.

“Reducing the business rates poundage to 35p in the Holyrood Budget would help the hospitality ­sector to boost economic growth, ­create jobs and support Scotland’s ­communities and high streets, while also ending the inherent unfairness that sees hospitality businesses taxed at a higher rate than retail businesses.”

Marc Crothall, chief executive of the Scottish Tourism Alliance, said the Budget would “likely” lead to business owners having to freeze any further pay rewards and pause new recruitment.

(Image: STA)

“Redundancies cannot be ruled out because some operators quite simply will not be able to afford the additional rise in employee costs,” he said.

“This will result in them ­having to reduce their trading hours or ­customer offer, impacting on ­availability and overall appeal.

“Once again, this additional ­labour cost will strike the bottom line of the many businesses in our sector that are struggling to make a profit to grow and invest in their people and the quality of their product offered.”

Dr Liz Cameron CBE, chief executive of the Scottish Chambers of ­Commerce (SCC) said the scale of the additional costs would mean that pay rises and additional staff hiring might go on hold, or new jobs would not be created.

“Staffing remains the most ­significant cost pressure for ­businesses and impacts recruitment, retention and training and – as the Office for Budget Responsibility has highlighted – the majority of any rise in employers’ NICs would be passed on to workers via lower pay rises,” she said.

However, the Chancellor has insisted ministers have “protected the smallest businesses” from the tax hike, and stood firm on the promise not to raise the key taxes on “working people” – national insurance, income tax and VAT.

(Image: PA)

Scottish Finance Secretary ­Shona Robison said: “The 2024-25 ­Scottish Budget delivers a ­competitive ­non-domestic rates ­regime ­including the lowest poundage in the UK for the sixth year in a row, and a package of reliefs worth an estimated £685 million.

“Our Small Business Bonus Scheme remains the most generous of its kind in the UK.

“Decisions on non-domestic rates for next year will be ­considered in the context of the Scottish Budget of 2025-26.”

The Small Business Bonus Scheme is available to businesses where the combined rateable value of their premises is £35,000 or less and the values of individual premises are £20,000 or less.

The Scottish Government estimates that around half of the properties in the retail, hospitality and leisure ­sectors in Scotland are eligible for 100% relief in 2024-25.