How National Insurance Increases Are Squeezing SMEs in Engineering and Energy

"It’s not just about the project costs anymore. It’s about survival."

In April 2025, UK employers will face a hike in National Insurance Contributions (NICs)—and while every business will feel the pressure, SMEs in engineering, renewable energy, and infrastructure will feel it hardest.

These industries already operate under tight margins, talent shortages, and growing compliance demands. Now, the government is piling on more financial pressure that could slow delivery, discourage hiring, and push many small firms to the edge.

What’s Changing and Why It Hurts

NIC Increases

• Employer NIC rate rising from 13.8% to 15%

• Threshold dropping from £9,100 to £5,000

This means SMEs will pay NICs on more of their employees' wages, including low-paid and part-time workers. It's a direct hit to payroll.

Government Burden on SMEs

• These changes come on top of rising energy costs, inflation, and ongoing supply chain pressure.

• Many SMEs already lack in-house HR or compliance teams—now they're expected to absorb a permanent increase in fixed costs.

• There’s no targeted relief or offset for people-intensive sectors like construction, engineering, and energy.

SMEs are left with three bad options: raise prices, cut staff, or absorb the hit.

Sector Impact: Why Engineering & Energy SMEs Are Exposed

1. High Payroll, Low Margin

Project-based delivery models require skilled teams and adaptability. With material costs, insurance, and delays already hitting margins, the NIC hike becomes a serious financial threat.

2. Contractors vs PAYE Confusion

As direct employment gets more expensive, firms may turn back to subcontractors—but this brings compliance risk and delivery instability. There’s no clear win.

3. Tender Pressure Intensifies

Tenders are cost-sensitive. SMEs can’t raise prices without risking bids. Absorbing the cost erodes profits. Cutting corners isn’t an option. The squeeze is real.

How Williams Consulting Helps SMEs Survive This

This is exactly where our model makes the difference. At Williams Consulting, we help SMEs move from isolated operators to scalable, connected businesses—without inflating payroll or taking unnecessary risks.

Shared Delivery = Shared Cost

We connect SMEs with other pre-vetted specialists to form delivery teams, reducing the need for full-time hires and spreading cost across projects. This means:

• Flexible access to skilled talent

• No recruitment overhead

• No compliance shortcuts

Compliance & Bid Support Without Full-Time Staff

We help you get tender-ready with:

• Health & safety policies

• Risk management plans

• Documented systems

All without needing a permanent compliance hire.

Business Development Without Guesswork

Our support includes:

• Identifying relevant tender opportunities

• Building pricing strategies that factor in NIC and other cost increases

• Positioning you as a low-risk, high-trust contractor

No Upfront Cost, Aligned Incentives

We only earn when you win. In a climate where every penny counts, that’s one less fixed cost weighing you down.

Visual Breakdown: Risk Comparison – Traditional SME vs Williams Model

Risk FactorTraditional SME ModelWilliams Consulting ModelHigh Fixed Payroll CostsHigh (5/5)Low (2/5)Compliance BurdenHigh (4/5)Low (2/5)Recruitment FeesVery High (5/5)Minimal (1/5)Delivery Risk (Staff Shortages)High (4/5)Low (2/5)Bid Readiness & PositioningModerate (3/5)Strong (4/5)Scalability of OperationsLow (2/5)High (5/5)

This side-by-side view shows exactly how Williams Consulting reduces the operational and financial pressure on SMEs—especially under economic strain like the NIC hikes.

Final Thought: The Wrong Policy at the Wrong Time

The NIC hike is poorly timed. It punishes SMEs that are already carrying the weight of the UK’s infrastructure and energy transition. There’s no relief, no flexibility, and no understanding of how small businesses operate in high-compliance sectors.

But resilience isn't optional—and adaptation is what SMEs do best.

At Williams Consulting, we give you the tools, the team, and the strategy to navigate this storm.

Because the only way to survive cost hikes like this... is to stop doing business alone.

Do you need help restructuring your delivery model, controlling cost, or winning tenders in this new environment? Let’s talk.

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