Budget Uncertainty: Sir Keir Starmer Hints at Potential Employer National Insurance Hike Amid Fiscal Challenges

Sir Keir Starmer has not dismissed the possibility of a hike in national insurance for employers in the upcoming budget. For the past week, ministers have been evasive when asked if the chancellor plans to raise this employer tax.

Political correspondent @alixculbertson

Tuesday, October 15, 2024, 10:

Sir Keir Starmer has not dismissed the possibility of increasing national insurance contributions for employers in the forthcoming autumn budget.

When questioned about whether he would go back on his promise by raising the employer portion of the national insurance tax in the upcoming 31 October budget, the prime minister pointed out that Labour's manifesto only committed to maintaining current national insurance rates for "working people."

"He emphasized to the BBC that their campaign platform explicitly stated there would be no tax hikes for working individuals."

Our manifesto explicitly states that we will not increase taxes for working individuals.

"I will point out that wherever commitments were outlined in our platform, those are commitments we intend to uphold."

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According to the Institute for Fiscal Studies (IFS), national insurance contributions rank as the second highest source of tax revenue in the UK, projected to generate nearly £170 billion in the 2024-25 fiscal year, which constitutes approximately one-sixth of the country's total tax income.

Both employees and self-employed individuals pay these charges on their income, as do employers, who contribute at a higher rate on behalf of their employees.

Experts suggest that the government does not require employers to pay national insurance on the pension contributions they make for their employees, a policy that could potentially be under review.

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During the election campaign, the now Chancellor Rachel Reeves described "working people" as individuals who are employed and go out to work.

She explained to Sky News, "Essentially, working people are individuals who actively engage in jobs and earn their income through diligent effort."

Over the past week, the government has come under scrutiny regarding potential increases in national insurance contributions for employers. This issue was brought to the forefront when former Prime Minister Rishi Sunak inquired during last Wednesday's Prime Minister's Questions whether the commitment to not raise contributions extended to both employers and employees, addressing his question to Sir Keir.

Sir Keir avoided answering the question directly on two occasions, instead stating that his administration has made "a firm promise" not to increase taxes for working individuals.

Business Secretary Jonathan Reynolds strongly suggested on Sky News' Sunday Morning with Trevor Phillips that the government plans to increase the tax rate for employers.

"He mentioned that the commitment involved taxes on the working class… the manifesto contains quite a bit, yet we must await the specifics of the budget… it's going to be a growth-oriented budget," he stated.

Discover more: What financial policies does Labour adhere to? What potential tax increases might Labour implement in the upcoming budget?

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Ms. Reeves strongly suggested that she is considering raising the tax on employers.

Addressing attendees at the government's global investment conference on Monday, she stated, "We will adhere to the pledges outlined in our campaign platform."

"However, it's important to recognize that there's an additional £22 billion deficit, which was not anticipated before the election, that we must address. This issue isn't just for one year; it extends across the projected period."

"We need to address the discrepancy between the government's expenditures and its revenue from taxes. However, we will remain a government that adheres to our campaign promises, particularly the commitment not to increase taxes on the working population."

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