Starmer is proposing an increase in employer national insurance but promises to keep tax promises for workers
Sir Keir Starmer has left the door open to an increase in employers’ national insurance contributions, despite Labour’s election promise of no tax increase for working people.
The prime minister confirmed that “tough” decisions will need to be made in the upcoming budget, but stressed the commitment of workers to their pledges.
During the election campaign, Labor vowed not to increase national insurance. However, while Starmer and Chancellor Rachel Reeves have reiterated that the pledge includes employee taxes, they have stopped short of ruling out an increase in the share paid by employers.
Reeves warned businesses that taxes would need to rise to ensure economic and financial stability. He pointed out that businesses are more concerned about political stability than tax rates, and promised a “business tax road” to give certainty to investors in the coming years.
He said employers’ contributions “are not in the manifesto”, he said: “We were very clear in our manifesto that we will not increase the basic tax paid by working people.”
The Labor manifesto said: “Labour will not increase taxes on working people, so we will not increase national insurance, basic, higher or additional rates of income tax, or VAT.”
Laura Trott, shadow secretary to the Treasury, said: “Regardless of what they say, it is clear to all that national insurance for employers is in clear breach of the Labor manifesto.”
However, Labor sources revealed that Trott criticized Reeves during the campaign for “blatantly” refusing to increase employer contributions.
A potential increase in employers’ national insurance contributions has drawn criticism from some business leaders, who say the tax on employers is putting jobs and businesses at risk. The Federation of Small Businesses has warned that such a move could put undue pressure on small employers.
