Sir Keir Starmer has left the door open to an increase in employers’ national insurance contributions, despite Labour’s election promise not to increase taxes on working people.
The Prime Minister confirmed that “tough” decisions must be made in the upcoming budget, but stressed that Labor is sticking to its manifesto promises.
During the election campaign, Labor promised not to increase national insurance. While Starmer and Chancellor Rachel Reeves have reiterated that this promise will cover taxes on employees, they have not been able to rule out an increase in the share paid by employers.
Reeves warned companies that taxes would have to rise to ensure economic and fiscal stability. She argued that companies are more concerned about political stability than tax levels, and promised a “business tax roadmap” to provide certainty for investors in the coming years.
She said employer contributions were “not in the manifesto”, arguing: “We were very clear in our manifesto that we were not going to increase the key taxes paid by working people.”
Labour’s manifesto said: “Labour will not increase taxes on working people, and therefore we will not increase national insurance, basic, higher or additional rates of income tax or VAT.”
Laura Trott, the shadow chief secretary at the Treasury, said: “Whatever they say, it is clear to everyone that increasing national insurance contributions for employers is a clear breach of the Labor manifesto.”
However, Labor sources pointed out that Trott had criticized Reeves during the campaign for ‘conspicuously’ refusing to rule out higher employer contributions.
The potential rise in national insurance contributions has drawn criticism from some business leaders, who argue that taxing employers risks stifling jobs and businesses. The Federation of Small Businesses warned such a move could put unnecessary pressure on small employers.