Britain has 1.42 million businesses employing staff. More than four in five have fewer than ten employees. Behind many of them is someone worrying about the next tax bill, how to pay their staff and whether there’s enough left to pay themselves.
Yet according to Treasury minister Emma Reynolds, employers apparently aren’t working people.
Appearing on GB News on Sunday, the Chief Secretary to the Treasury told Camilla Tominey:
“I don’t think employers are working people, they are companies.”
The remarks came as Reynolds defended the Government’s approach to taxation, drawing a distinction between employers and employees.
But anyone who has spent time running a small business will understand the reality. Many owners work alongside their staff, put in long hours, take financial risks and carry responsibility for other people’s livelihoods.
And unlike politicians, they cannot rely on a publicly funded salary to arrive in their bank account every month.
So perhaps it’s worth examining what the numbers actually tell us.
Britain’s 1.42 Million Employers
According to the latest Department for Business and Trade estimates, the UK had approximately 5.69 million private-sector businesses at the beginning of 2025.
Almost all were small or medium-sized enterprises (SMEs).
The figures are striking:
16.9 million people worked in SMEs, accounting for 60% of private-sector employment.
1.42 million businesses employed staff beyond their owners.
81% of those employers had fewer than ten employees.
99.85% of private-sector businesses were SMEs.
Just 8,335 businesses employed 250 people or more.
SMEs also generated approximately £2.83 trillion in annual turnover, accounting for 51% of the private-sector total.
These figures measure employment rather than new jobs created, and include working business owners and self-employed people. But they demonstrate just how dependent Britain is on smaller enterprises.
Think about the local electrician who takes on an apprentice. The family-run café employing six people. The builder, shopkeeper or small engineering company providing employment in their community.
These are not necessarily wealthy executives sitting in boardrooms. Many are people working on the tools, serving customers and keeping their businesses running.
And when something goes wrong, it is often the owner who has to find the money to put it right.
Since when did employing somebody else mean you stopped being a working person?
The Tax on Employers That Workers End Up Paying
There is a much bigger economic issue behind the minister’s remarks.
Labour promised not to increase the headline rates of income tax, employee National Insurance or VAT, presenting these as protections for working people.
But in April 2025, the Government increased employers’ National Insurance contributions.
The rate rose from 13.8% to 15%, while the annual earnings threshold at which employers start paying the tax fell from £9,100 to £5,000.
For someone earning £30,000 a year, those changes increased the gross annual employer National Insurance bill by approximately £866, before reliefs.
The Government also increased the Employment Allowance from £5,000 to £10,500, which protects many eligible smaller businesses from some or all of the additional costs.
But there is something much more important here.
Who ultimately pays when the Government increases taxes on employers?
According to the Office for Budget Responsibility’s October 2024 assessment, the answer is not simply the employer.
The OBR assumed that, once businesses had adjusted, approximately 76% of the additional employer National Insurance cost would ultimately be passed on to employees through lower real wages, with the remaining 24% affecting company profits.
That assumption applies from 2026–27 onwards. It is a forecast of how businesses respond over time, rather than a measurement of what has happened so far.
But the economic principle is important.
A tax imposed on an employer does not necessarily mean the employer ultimately bears the full cost.
Businesses can respond through lower wage increases, higher prices, reduced profits or changes to recruitment and working hours.
And that means employees can end up paying for a tax that politicians insist is being charged to somebody else.
The Treasury might distinguish between employers and working people. The economics doesn’t make that separation nearly so simple.
Small Businesses Are Already Pulling Back on Hiring
There is growing evidence that smaller firms are becoming increasingly cautious about recruitment.
The latest Office for National Statistics vacancy figures, published on 20 October, reveal a particularly concerning trend.
Among businesses employing between one and nine people, the number of vacancies fell from approximately 98,000 in April–June 2026 to just 77,000 in July–September.
That’s a 21.1% fall in a single quarter.
Compared with the same period a year earlier, vacancies at these businesses were down by an even more substantial 32.8%.
Outside the pandemic, the latest figure is the lowest for this category of business since 2013.
Across the economy, total vacancies fell to approximately 691,000, while separate HMRC payroll estimates suggest there were 66,000 fewer payrolled employees in September 2026 than a year earlier.
Perhaps most tellingly, the ONS itself reported feedback suggesting that smaller firms may be holding back recruitment because of increased labour costs.
Now, we cannot attribute every lost vacancy or job to higher employer National Insurance. Consumer demand, interest rates, energy prices and wider economic uncertainty all influence business decisions.
But the direction of travel is concerning.
For a small business, employing another person is a considerable financial commitment. It is not simply the salary, but also pension contributions, employer taxes, training, equipment and other overheads.
And those commitments have to be met regardless of whether sales are strong or customers are spending less.
When costs increase, something often has to give.
Perhaps the owner takes home less money. Perhaps investment is delayed. Perhaps that extra employee is never recruited.
For a larger business, these decisions may be absorbed across hundreds or thousands of employees.
For a company employing five people, they can determine whether the business grows or simply survives.
And if smaller firms become increasingly reluctant to recruit, where are the additional jobs Britain needs supposed to come from?
Ministers Make the Rules. Business Owners Carry the Risk.
There is another distinction worth considering when politicians discuss who qualifies as a working person.
An ordinary Member of Parliament currently receives a basic annual salary of £98,599, funded by taxpayers. Ministers may receive additional salaries, while parliamentary staffing and legitimate office expenses are also supported from public funds.
Of course, MPs have important responsibilities. Constituency work and parliamentary business can involve demanding hours.
But there is a fundamental difference between their financial position and that of somebody running a small business.
An MP receives a publicly funded salary while they hold office. A business owner has to generate the income to pay themselves.
A politician does not have to worry about whether enough customers will walk through the door tomorrow to cover their own salary.
A small business owner might.
Ministers can increase the cost of employing someone with the stroke of a pen. A small business owner has to find the money to pay for it.
And when economic conditions deteriorate, it is often the owner who takes the financial hit first.
Lower profits, reduced personal income, delayed investment and the possibility of losing the business altogether.
That is a very different kind of responsibility.
There is also something rather contradictory about the Government’s own messaging.
In its October 2026 Budget, the Government described small businesses as the backbone of the British economy, supporting around 13 million jobs.
That smaller-business category excludes medium-sized firms, which are included in the broader SME employment figure of 16.9 million.
The Government clearly recognises their economic importance. Indeed, it announced measures aimed at reducing bureaucracy, supporting high streets and making it easier for smaller companies to compete for public contracts.
Yet only days later, a senior Treasury minister drew a distinction between employers and working people.
To be fair, there is a legal distinction between a company and an employee. And governments need to distinguish between different forms of income when designing tax policy.
But that does not mean the person who owns and runs a business isn’t working.
And it certainly doesn’t mean the financial decisions affecting employers have no consequences for their employees.
Britain needs businesses to invest, expand and employ more people. But for many small employers, rising costs and economic uncertainty are making those decisions increasingly difficult.
The Government can draw whatever distinctions it likes between employers and working people.
The economic reality is that the two depend on one another.
And while ministers debate who qualifies as a working person, millions of business owners are getting on with the job of running their businesses, paying wages and trying to keep their doors open.
Ministers make the rules. Employers have to find the money to make them work.
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✍️ Jamie Jenkins
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Another great piece Jamie. I think we should tax government for their ineptitude and profligacy!
Basically the Uni party is saying that they are so inadequate in running the economy and have been for the last 30 years , that they have to steal our money to ensure they can continue to become as rich as possible before we kick them out.
I have 3 adult daughters who are all socialists as are their partners. They all consider that anyone who employs another person is by definition "Exploiting" them and are therefore beyond the pale. This is applied to businesses large and small.