Vithanage Erandi Kawshalya Madhushani Jade Times Staff
V.E.K. Madhushani is a Jadetimes news reporter covering Political.
Badenoch Claims Government’s Tax Hike "Milks" the Private Sector
Kemi Badenoch has publicly criticized the government’s recent budget, arguing it is overly burdensome on the private sector due to a planned increase in employer National Insurance (NI) contributions. The Conservative leader voiced her concerns during Prime Minister’s Questions, challenging the Prime Minister on how local councils will handle higher social care costs driven by the tax increase.
Sir Keir Starmer noted that while the Conservatives support additional funding for education and healthcare, they remain divided on how to finance these initiatives. "The magic money tree is back," he quipped, criticizing the government’s unclear fiscal plan.
National Insurance Increase and Financial Implications
Chancellor Rachel Reeves’ budget last month included a National Insurance hike for employers, raising the rate from 13.8% to 15% starting in April 2025. Additionally, the threshold for NI contributions will be lowered from £9,100 to £5,000, a move Reeves claims will raise an estimated £25 billion annually to secure public finances. Although the public sector will be shielded from this hike, GP practices operating as private entities may be impacted, potentially affecting healthcare delivery.
Liberal Democrat leader Sir Ed Davey called on the Prime Minister to exempt GP practices and healthcare providers from the NI rise. The Prime Minister responded that resources for GPs would be addressed with funding plans later this year.
Increased Costs for Local Councils and Potential Council Tax Changes
Badenoch also raised concerns about the impact of NI increases on council budgets, suggesting they may need to cover rising social care costs. She questioned whether the government would consider lifting the 5% council tax cap on local authorities to help meet the £2.4 billion shortfall in local government finances. While the Prime Minister’s spokesperson later confirmed that the council tax cap would remain unchanged, the Budget had allocated £600 million to address social care pressures.
This comes at a time when several councils, including Nottingham, Birmingham, and Woking, have encountered significant financial difficulties, leading some to declare effective bankruptcy. Many councils are now lobbying for a cap increase to better balance their budgets.
Badenoch’s Final Critique: "Tax Mess" and Public Sector Bailouts
Badenoch concluded her questions by accusing the government of producing an “ideological budget” that, in her words, “milks the private sector.” She warned that this “tax mess” had created a situation in which government ministers are “queuing up for public sector bailouts.”
In response, the Prime Minister criticized the Conservative Party’s economic performance over the past 14 years, including the aftermath of Liz Truss' controversial “mini-budget,” before rejecting Badenoch’s economic advice.
