Sir Keir Starmer has left the door open to increase employers’ National Insurance contributions, despite Labour’s election pledge not to increase taxes on workers.
The Prime Minister stressed that “difficult” decisions will have to be made in the next budget, but stressed the Labor Party’s commitment to its promises in its election platform.
During the election campaign, Labor pledged not to increase National Insurance. However, while Starmer and Chancellor Rachel Reeves stressed that this pledge covers taxes on workers, they stopped short of ruling out increasing the portion paid by employers.
Reeves warned businesses that taxes would need to rise to ensure economic and financial stability. She said companies were more concerned with political stability than tax levels, and promised to develop a “business tax roadmap” to provide certainty to investors in the coming years.
Employer contributions “were not in the statement,” she said, saying: “We were really clear in our statement that we were not going to increase the main taxes that workers pay.”
The Labor Party statement said: “Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, top or additional rates of income tax, or VAT.”
Shadow First Chancellor of the Exchequer Laura Trott said: “No matter what they say, it is clear to everyone that increasing National Insurance for employers is a clear breach of Labour’s manifesto.”
However, Labor sources indicated that Trott criticized Reeves during the campaign for his “apparent” refusal to rule out an increase in employer contributions.
The potential rise in employers’ National Insurance contributions has drawn criticism from some business leaders, who claim that taxing employers threatens to stifle jobs and enterprise. The Federation of Small Businesses warned that such a move could put undue pressure on small employers.