Vithanage Erandi Kawshalya Madhushani Jade Times Staff
V.E.K. Madhushani is a Jadetimes news reporter covering Political.
Speculation Grows as Labour Faces Backlash Over Possible Breach of Manifesto Pledge
Prime Minister Sir Keir Starmer has not ruled out the possibility of raising National Insurance (NI) contributions for employers in the upcoming Budget. During an interview, Starmer sidestepped direct questions on whether Labour’s manifesto promise to not raise taxes for "working people" extended to employers' NI contributions.
The Labour Party's 2024 manifesto clearly ruled out increases in National Insurance, income tax, and VAT. However, the prime minister’s statements suggested that an NI hike for employers may be forthcoming, especially in light of the government’s need to raise funds for key initiatives.
Labour has indicated that any potential increase in National Insurance would not apply to individual workers but instead target the contributions made by employers. Treasury officials are reportedly exploring this move as a way to generate additional revenue, with projections estimating that applying the full 13.8% NI rate to employer pension contributions could raise up to £17 billion annually.
Employer National Insurance contributions are currently set at 13.8% on earnings above £175 per week. While the government has not officially confirmed any changes, business groups and analysts are preparing for the possibility of a NI increase, warning of its potential impact on hiring, wages, and overall economic growth.
Economic experts, including the Office for Budget Responsibility (OBR), have voiced concerns that increasing employer NI contributions could lead to higher employment costs, potentially slowing job growth. Critics argue that this would violate Labour’s pledge to avoid tax hikes on working people, as businesses might pass on increased costs to workers or limit hiring.
As the government prepares to release its Budget, it is expected that the decision to potentially raise employer National Insurance contributions will be one of the most significant and controversial policy moves, particularly in the current economic climate.
