It has not been Rachel Reeves’s year. From accusations of CV embellishment to noisy backlash over the farmer’s tax, the Chancellor has been fighting on all fronts as she battles her way towards the Spring spending review. And now, in yet another blow for Reeves, it transpires that her plans to increase the amount of tax paid by employers are predicted to lead to, er, a decrease in Britain’s active workforce. Talk about lose-lose…
The Treasury’s James Murray admitted today, in response to a parliamentary question from Tory MP Wendy Morton, that the impact assessment of the effects of Labour’s proposed employer national insurance contribution (NIC) hike hasn’t yielded wholly positive results. The Ealing North MP noted that, from 2025/26 onwards, the Office for Budget Responsibility expects the tax rise to lead to a reduction in the participation rate – the proportion of Brits in work or seeking work – by 0.1 per cent. So much for getting Britain working, eh?
Reeves’s Budget announcement that Labour will increase employer NICs from 13.8 per cent to 15 per cent in April this year has spooked businesses, while workers worry about how their bosses will act to mitigate the tax hike. Financial consultancy firm Deloitte has warned that employers in low-wage sectors may struggle to absorb the costs of the rise, which could in turn lead to lay offs. Conservative peer Baroness Redfern has also raised this issue in the Lords this year – with Labour’s Lord Livermore writing back in January that ’employers have a choice about how they respond to the NICs increase’. Charming.
And all this comes after Chief Secretary to the Treasury Darren Jones admitted in November that the Budget will in fact hit working people. As two-thirds of Brits continue to hold an unfavourable view of the Labour Party, presiding over job losses is hardly going to do Sir Keir Starmer’s army any favours with the electorate. Another own goal by the party of the working people…
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