The Chancellor has refused to rule out an increase in National Insurance (NI) contributions paid by employers, despite previously warning that the move could take “money out of people’s pockets.”
Rachel Reeves said Labour’s election pledge not to increase NI on “working people” related to employees, as opposed to the sum paid by employers.
But in 2021, Reeves personally criticised Rishi Sunak’s idea of increasing NI, describing the idea as a “jobs tax”.
Former Prime Minister Rishi Sunak moved to increase NI contributions, including those by employers, amid efforts to fund new social care funding three years ago.
Watch: Rachel Reeves blasts Rishi Sunak on National Insurance Contributions
In the House of Commons, Reeves attacked the Tory plans, warning that the move would be going against the “strong advice of businesses and trade unions.”
She also said rises to employer’s NI would “make each new recruit more expensive and increase the costs to business.”
She said: “That is one of the reasons it is so worrying that, at this crucial time, the Prime Minister and the Chancellor concocted a new jobs tax to arrive in the spring.”
“The decision to saddle employers and workers with the jobs tax takes money out of people’s pockets when our economic recovery is not yet established or secure and only adds to the pressure on businesses after a testing year and a half.
“When all other costs are going up – the costs of energy and of supplies – these tax rises are only hitting them harder,” she concluded.
Now, the Chancellor’s words have come back to haunt her after Starmer hinted employer’s NI will be going up in the upcoming Budget on October 30.
Today, Reeves has been hit by warnings from business groups that rises to NI will hit jobs and destabilise the economy.
The Federation of Small Businesses said a rise in NICs would “make every job in all our local communities more expensive to maintain.
“You don’t get to a pro-small-business Budget without the government honouring its cast-iron manifesto commitment to not increase National Insurance contributions, including on small employers.”
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The Government’s tax and spending watchdog also warned that the levy would be “passed through quite quickly into lower pay”.
When asked about employer’s NI, Reeves said: “We were really clear in our manifesto that we weren’t going to increase the key taxes paid by working people, income tax, insurance and VAT.”
Asked on GB News if that included employers’ contributions she said: “That was not in the manifesto.”
She added that her only pledge to businesses was keeping corporation tax at 25 per cent, which the Chancellor said would remain the case until the end of Parliament.
