public mediaIn an interview with BBC Breakfast, Sir Keir Starmer did not rule out increasing employer national insurance in the budget.
The Prime Minister sidestepped a question about whether employers’ national insurance (NI) would be covered by Labour’s manifesto pledge not to raise taxes on “working people”.
Labour’s 2024 manifesto rules out increases in national insurance, income tax and VAT.
Speaking in Downing Street, Sir Keir said this month’s budget “will be tough” but will be “focused on rebuilding our country”.
Sir Keir said Labor had “been very clear in our manifesto that we will not increase taxes on working people”.
He added: “This is not just a manifesto, we said many times during the campaign that we intend to keep the promises we made in the manifesto.”
Currently, employers pay NI at a rate of 13.8% for all employees earning more than £175 a week.
The NI rate also applies to employees aged 16 or over who earn more than £242 a week or have annual profits of more than £12,570.
People over state pension age will not pay this even if they are working.
Speculation is growing that NI rates paid by employers could rise to $100,000 next month Filling £22bn ‘black hole’ Labor says it has the answer in the national finances.
The Prime Minister insisted he would not be swayed by budget speculation ahead of a formal announcement in just over two weeks.
Given that these are market-moving measures, this is the standard position taken by the government – and in this particular case, the budget will be the most important political and economic moment of this government to date.
Having said that, it was clear from the Prime Minister’s interview with Breakfast that employers’ National Insurance rates will rise.
From a communications perspective, Downing Street knows the hare is running – they could choose to rule out an increase in employer NI, and if they don’t, they know people will think this is going to happen.
A similar dance is taking place over the possibility of Chancellor Rachel Reeves changing fiscal rules – the government’s own rules on how much money can be borrowed and under what circumstances.
There will be debate as to whether this is consistent with the Labor manifesto. There are legitimate arguments on either side of this argument, so the government has a trust issue.
But the more important question is what increasing employer national insurance would mean for the economy, especially as the government seeks to create a better climate for business investment in the UK.
on Monday, Rachel Reeves says Labour’s election pledge would not increase “working people’s” NI in relation to employees, rather than the amount paid by employers.
Treasury officials are reportedly exploring state insurance of employer pension contributions to boost budget revenue.
Introducing National Insurance at 13.8% of full employer pension contributions could raise up to £17 billion a year for the UK exchequer According to data from the Institute for Fiscal Studies (IFS).
In addition to the signal on NI, the government on Tuesday allocated £68 million to prepare brownfield sites for new housing.
Sir Keir told the BBC the money would be used to “deliver housing across the country”.
The government has pledged to build 1.5 million homes over the next five years by reforming the housing construction system.
The new funding comes after the government announced at an investment summit on Monday it had secured £550m from three investment funds – Schroders, Man Group and Resonance – for house building.
Sir Keir said: “We have said that as a government we will lay down the foundations and rebuild our country and made it clear that now is the time to stand behind us.”
