The business secretary has said Labour’s manifesto pledge not to raise national insurance applied to employees but he did not rule out raising employers’ contributions in the budget.
Speaking on Sky’s Sunday Morning with Trevor Phillips, Jonathan Reynolds was asked if the pledge applied both to employees’ and employers’ national insurance contributions (NICs).
He replied: “That pledge, it was taxes on working people, so it was specifically in the manifesto, a reference to employees and to income tax.”
He said he would not say anything more before the budget. “There’s a lot already in the manifesto, but you have to wait for the detail of a budget.”
His answer has fuelled speculation that such a rise is being considered.
NICs are paid by employees and employers and it has been unclear whether Labour’s promise not to increase the tax included both.
During prime minister’s questions on Wednesday, Keir Starmer declined to rule out raising employers’ NICs in the upcoming autumn budget.
The shadow work and pensions secretary, Mel Stride, told the programme it would be an “absurdity” for Labour to argue that raising employers’ NICs was not a breach of their manifesto commitments.
Stride said Labour had “boxed themselves in” by claiming they were not going to be a party that was going to have to put up taxes, “and therefore saying that they would not put up all sorts of different taxes, broadly based taxes that account for about 75% of all the taxes raised”.
“That leaves you with a narrow field of taxes now to go for. I think if they go for employers’ national insurance, firstly, it’s a very bad tax to raise, because it’s a tax on jobs, and what they should be about is growth and increasing productivity in the economy.
“The second thing is, I think it goes totally counter to their manifesto that assured us they would not be putting up national insurance.”
Stride also said the government’s claim that the Conservatives left a £22bn black hole in public finances was “fictitious”.
The chancellor has also hinted she is planning to tweak the rules that dictate how much the government is allowed to borrow for spending on infrastructure investment. Writing in the Sunday Times, Rachel Reeves said it was “time that the Treasury moved on from just counting the costs of investments, to recognising the benefits too”.