Ministers have given the clearest hint yet that Rachel Reeves is looking to raise national insurance contributions for employers in the budget, provoking accusations the chancellor is preparing to break a Labour manifesto pledge.
Jonathan Reynolds, the business secretary, suggested that the chancellor could increase the levy on employers, which is charged at a rate of 13.8 per cent of most workers’ salaries.
He stood by the party manifesto, which ruled out raising income tax, VAT or national insurance, but refused to say that this applied to the rate paid by employers as well as that paid by employees.
Jonathan Reynolds said the manifesto pledge applied to employees, but refused to be drawn on whether it included employers
JEFF OVERS/BBC/PA
“That pledge, it was taxes on working people, so it was specifically in the manifesto a reference to employees and to income tax,” Reynolds told Sky News on Sunday. He refused to be drawn on the chances that Reeves would increase the burden on employers, saying that people would “have to wait for the detail” in the budget on October 30.
Sir Keir Starmer also declined to rule out the same rise when pressed repeatedly by Rishi Sunak, the opposition leader, at prime minister’s questions last week.
Among the options available to the chancellor are increasing the rate of employers’ national insurance contributions. A one percentage point increase could raise about £8.9 billion a year. Another choice could be levying national insurance on employers’ pension contributions, which are exempt at present. That could generate up to £18 billion a year.
The comments made by Reynolds on Sunday prompted accusations from senior Conservatives that Labour had U-turned on its election promise. Robert Jenrick, one of the final two Conservative leadership contenders, called it “the strongest indication yet that Labour will betray another manifesto pledge”. He said that it was an ominous sign for business leaders before the government’s investment conference for chief executives in London on Monday.
Robert Jenrick claimed the possibility of a rise in employers’ contributions was already scaring away investors
TAYFUN SALCI/ZUMA
“All tax is ultimately paid by working people,” Jenrick said. “The prospect of this tax on jobs is already scaring away investors and leaves Starmer’s investment summit in disarray. Labour’s high tax and spend agenda will drive our economy into the ground.”
Mel Stride, the shadow work and pensions secretary, accused Labour of having “boxed themselves in” by “claiming they were not going to be a party that was going to have to put up taxes”. He called employers’ national insurance contributions “a tax on jobs” that could hurt growth and productivity.
I think it goes totally counter to their manifesto that assured us they would not be putting up national insurance,” Stride told Sky News. “So unless they’re to argue that employers’ national insurance is not the same thing as national insurance, which is an absurdity to argue, then they’re going to be breaching their manifesto commitment.”
Under Sunak’s government, employees’ national insurance contributions were cut from 12 per cent to 8 per cent. Reeves said when she was shadow chancellor that she supported the cuts.
Labour insiders denied that raising national insurance for employers would break their manifesto pledge. They said that during the election campaign the Conservatives had attacked Labour for refusing to match their pledge not to raise the levy specifically for businesses.
On Sunday night Reeves was warned by a senior business leader against measures that could deter investors and drive wealthy people out of the UK. John Caudwell, the billionaire founder of Phones4U and a former Tory donor who switched to Labour at the election, cautioned against proposed changes to the non-domiciled tax status.
“Anything that we do that might be negative to attract inward businesses and inward wealthy people, is a negative,” he told the BBC. “I’m not too worried about losing the odd few people to Monaco or wherever who want to avoid paying any tax. They’ve already gone, most of them. But there are issues all around the policies, that we have to be very careful of.”
He added: “I don’t agree with changing the non-dom rules. I think that’s unfair to a section of the non-doms … and we’re going to lose people that can help make Britain prosperous.”
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Labour hints at national insurance rise for employers[/gpt3]
Ministers have given the clearest hint yet that Rachel Reeves is looking to raise national insurance contributions for employers in the budget, provoking accusations the chancellor is preparing to break a Labour manifesto pledge.
Jonathan Reynolds, the business secretary, suggested that the chancellor could increase the levy on employers, which is charged at a rate of 13.8 per cent of most workers’ salaries.
He stood by the party manifesto, which ruled out raising income tax, VAT or national insurance, but refused to say that this applied to the rate paid by employers as well as that paid by employees.
Jonathan Reynolds said the manifesto pledge applied to employees, but refused to be drawn on whether it included employers
JEFF OVERS/BBC/PA
“That pledge, it was taxes on working people, so it was specifically in the manifesto a reference to employees and to income tax,” Reynolds told Sky News on Sunday. He refused to be drawn on the chances that Reeves would increase the burden on employers, saying that people would “have to wait for the detail” in the budget on October 30.
Sir Keir Starmer also declined to rule out the same rise when pressed repeatedly by Rishi Sunak, the opposition leader, at prime minister’s questions last week.
Among the options available to the chancellor are increasing the rate of employers’ national insurance contributions. A one percentage point increase could raise about £8.9 billion a year. Another choice could be levying national insurance on employers’ pension contributions, which are exempt at present. That could generate up to £18 billion a year.
The comments made by Reynolds on Sunday prompted accusations from senior Conservatives that Labour had U-turned on its election promise. Robert Jenrick, one of the final two Conservative leadership contenders, called it “the strongest indication yet that Labour will betray another manifesto pledge”. He said that it was an ominous sign for business leaders before the government’s investment conference for chief executives in London on Monday.
Robert Jenrick claimed the possibility of a rise in employers’ contributions was already scaring away investors
TAYFUN SALCI/ZUMA
“All tax is ultimately paid by working people,” Jenrick said. “The prospect of this tax on jobs is already scaring away investors and leaves Starmer’s investment summit in disarray. Labour’s high tax and spend agenda will drive our economy into the ground.”
Mel Stride, the shadow work and pensions secretary, accused Labour of having “boxed themselves in” by “claiming they were not going to be a party that was going to have to put up taxes”. He called employers’ national insurance contributions “a tax on jobs” that could hurt growth and productivity.
I think it goes totally counter to their manifesto that assured us they would not be putting up national insurance,” Stride told Sky News. “So unless they’re to argue that employers’ national insurance is not the same thing as national insurance, which is an absurdity to argue, then they’re going to be breaching their manifesto commitment.”
Under Sunak’s government, employees’ national insurance contributions were cut from 12 per cent to 8 per cent. Reeves said when she was shadow chancellor that she supported the cuts.
Labour insiders denied that raising national insurance for employers would break their manifesto pledge. They said that during the election campaign the Conservatives had attacked Labour for refusing to match their pledge not to raise the levy specifically for businesses.
On Sunday night Reeves was warned by a senior business leader against measures that could deter investors and drive wealthy people out of the UK. John Caudwell, the billionaire founder of Phones4U and a former Tory donor who switched to Labour at the election, cautioned against proposed changes to the non-domiciled tax status.
“Anything that we do that might be negative to attract inward businesses and inward wealthy people, is a negative,” he told the BBC. “I’m not too worried about losing the odd few people to Monaco or wherever who want to avoid paying any tax. They’ve already gone, most of them. But there are issues all around the policies, that we have to be very careful of.”
He added: “I don’t agree with changing the non-dom rules. I think that’s unfair to a section of the non-doms … and we’re going to lose people that can help make Britain prosperous.”
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