The BOSS: A regional snapshot

For many businesses, November’s Budget came as some relief. After months of speculation and countless policies trailed in the media, many business owners were relieved by the end result. With the further backpeddling on the agricultural property relief (APR) and business property relief (BPR) following the Budget and just before Christmas, business owners could be expected to be looking to the new year with renewed optimism.  

But all things are relative. If the 2025 Budget was welcome, it’s largely in comparison to last year’s. That hit businesses hard, as our Business Owner Sentiment Survey (The BOSS) in the Autumn showed. And as it also revealed, the effects weren’t evenly felt.  

Among the most affected were businesses in Yorkshire and the Humber. When it came to employment, our report showed far more business owners in the region saying redundancies were likely or very likely than across the UK overall: 58% for Yorkshire and the Humber, against 38% nationally. The same was true for hiring freezes (58%, compared with 39% UK-wide).  

On similar questions, the survey found the same. Asked if, for any reason, they were currently freezing or reducing headcounts, Yorkshire businesses were significantly more likely than average to say they were – again providing the highest positive responses of any region.  

The main drivers for that are no mystery. Yorkshire has a heavy manufacturing base that relies on a lot of relatively low-paid workers. The hikes in the national minimum wage, particularly for younger workers (which continued, albeit at a slower rate this year), combined with the changes to employers’ national insurance contributions in the 2024 Budget, significantly ramped up the costs of employment. In just two years, the costs of employing an 18- to 21-year-old on the minimum wage increased by about a quarter.  

As business owners at a recent roundtable in Leeds sponsored by S&W pointed out, it's not just the minimum wage, either. 

"Only a third of my staff are on minimum wage, but the differentials for supervisors and everybody else is where the numbers add up," said Andy Needham, owner of Barnsley-based Surplus Group, which specialises in the clearance and redistribution of surplus stock, including food, drink and household consumables.

"Bit by bit, small businesses are getting squeezed and squeezed. We are seeing now that the number of business failures is horrendous. It will get worse," he warned. 

The BOSS found business owners in Yorkshire and the Humber more likely than average to say the NI change had led them to either already make or plan to make a range of changes, including pay freezes, hiring freezes, reducing staff hours, cutting headcounts and even moving jobs abroad.  

Perhaps just as worrying for the government, more than half had scaled back expansion plans or were going to as a result of the NI change. And, again, owners in the region were more likely to say this than the average nationally. 

To some extent, the damage here is done. One in five in Yorkshire and close to a quarter (23%) nationally said they were planning to scale back expansion even if the Chancellor brought relief for rising employment costs in the Autumn Budget. As we now know, she didn’t. The NI changes stayed. The national minimum wage, meanwhile, has risen again – albeit more slowly.  

In fact, for Yorkshire businesses, as elsewhere, the 2025 Budget brought little help. Even the change to allow unused APR and BPR relief to pass between spouses was little more than a realignment to bring the rule in line with other inheritance tax reliefs. For some, who had already embarked on reorganising share ownership within their families and creating trusts, it will have come too late.  

The extension of the APR/BPR threshold to £2.5 million (£5m for a couple) announced in December is more significant. The BOSS found two thirds of Yorkshire business owners said they were considering cutting staff to put aside funds to pay the IHT resulting from the changes to BPR (compared with 44% nationally).  

Some of those may now be able to reconsider, but it’s unlikely to be enough to really turn the page for the region’s businesses. Again, like the change on spousal transfers, it will have come too late. (The Times reports that thousands of farms, for instance, had closed before the APR U-turn.)  

Two things may help. The first would be measures to encourage the growth that the government has talked about much but done little so far to promote. The second is perhaps a less ambitious aim: a period of stability on which business owners can begin to build themselves. If the 2025 Budget gave cause for hope, it is that businesses may have already seen the worst.  

If the government isn’t going to help Yorkshire’s and Britain’s businesses, they can hope it won’t hamper them as they strive to help themselves.