§ Nothing matters more for business than a stable economic environment—low interest rates and low inflation—and businesses throughout Britain are benefiting from the healthy sustainable growth in the economy that I have described today.
As I promised in my last Budget, there will be, from April 1997, a cut in the main rate of employers' national insurance contributions, to 10 per cent. The cut will be paid for by the proceeds that we are receiving from the landfill tax. A tax on waste is cutting a tax on jobs, and it will benefit employers in Britain and make it even cheaper to create new jobs in our growing economy. Our overheads on jobs are already less than half those in Germany, France or Italy. I am determined that we must keep that advantage over our competitors on the continent, where the creation of new jobs, in the rest of the European Union, is overregulated and overpriced. That fact is another practical reason for being confident that our unemployment will keep falling.
In this Budget, I propose to keep the three intermediate thresholds for employers' national insurance contributions where they are now. I propose to increase—by £10 and £1, respectively—the upper and lower earnings thresholds for employers' and employees' national insurance contributions.
In this Budget, I also want to deal with a particular concern of our small businesses, upon which so much of our future economic prosperity depends. I think that small businesses are most concerned about the burden of non-domestic rates.
The uniform business rate is a fixed cost which can rise each year beyond the control of the manager of any business, and it hits the small business hard. Since the last revaluation of business rates, I have repeatedly slowed down the increase of rates for those businesses whose rates have had to go up. No business property has seen its rates go up by more than 7½ per cent. above inflation in any one year. But I want to do more than that; it is not good enough. I have decided to freeze next year's rates bill for all small businesses whose rates would have gone up. Small properties whose rates are falling will have those reductions accelerated, which will benefit over 1 million small business properties, by up to £130 a year.
I want to go further. A freeze is a significant step that I can make right away, this year. We have already reduced business rates for rural village shops. But I realise that the current system of business rates bears particularly hard on smaller businesses, for which it represents a much bigger proportion of total costs compared with their large competitors. We must therefore move on as soon as possible to make more changes in the system to recognise this and to redistribute the burden more sensibly between smaller and larger businesses. My Budget next year will be a convenient opportunity to proceed with that.