Why Small Businesses Are Closing: National Insurance & Rising Costs
The closure of Coughlans Bakery – an 89-year-old business across Kent, Surrey, West Sussex and south London – offers a sobering lesson in how government policy and rising costs are squeezing UK small businesses.
Managing director Sean Coughlan blamed the shutdown on three key factors: the government’s April 2024 increase in national insurance contributions for employers, high business rates, and the spike in fuel prices following the Middle East conflict. Together, these cost the business an extra £20,000 a week. Recent heatwaves made things worse – customer footfall dropped so sharply that the bakery was taking in only 50% of its normal weekly revenue, while fixed costs stayed exactly the same.
What this means for you depends on your situation. If you work in a small business, this story highlights the real pressure your employer faces. Many UK firms are in similar positions right now – caught between rising employment costs and fixed overheads. If you’re thinking about a pay rise or worried about your job, understand that your employer’s financial health matters.
If you’re self-employed or run a small business yourself, the Coughlans case is a warning about margin erosion. When multiple cost pressures hit at once – national insurance rises, business rates, fuel spikes, and sudden demand shocks like summer heatwaves – even a long-established business can fail quickly. Review your own costs ruthlessly. Look for areas to cut or renegotiate. Check whether you’re eligible for any business support schemes or rate relief.
The government did introduce support for some small businesses facing national insurance hikes, but eligibility is tight. If you’re affected, contact your local council or visit the Business Support Finder on the gov.uk website to see what help is available.
For employees: if your employer is struggling, don’t ignore the warning signs. Start building an emergency fund now, and review your CV. For business owners: the time to act is now, not when you’re in crisis.
More help: Visit www.stepchange.org for free debt advice, or contact your local business support service through www.businesssupport.gov.uk.