UK politics live: Starmer warned employer national insurance hike ‘will mean lower wages for workers’
Leading think-tank the Institute for Fiscal Studies (IFS) said that a hike to employers’ national insurance contributions are a tax on the earnings of working people
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Sir Keir Starmer has been warned by a leading think-tank that any increase to employers’ national insurance contributions in the upcoming Budget could mean lower wages for workers.
The government has faced questions on whether its commitment not to raise national insurance covers employers’ contributions as well as those by employees.
When asked for clarity in an interview with the BBC, Sir Keir said:“We were very clear in the manifesto that we wouldn’t be increasing tax on working people and we expressly said that that was income tax, that was NICs etc.”
After being further pressed on whether employers could face the tax rise in the Budget on 30 October he reiterated that Labour would not “raise tax on working people” and they would “keep promises we made in the manifesto”.
Helen Miller, deputy director and head of tax at the IFS said that any increase to employers’ national insurance contributions could be passed onto workers in the form of lower wages.
She said: “Lots of questions about Employer NICs today. They are a tax on the earnings of working people. In the long run, expect the majority of a rise in employer NICs to be passed on to workers in the form of lower wages.”
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Starmer refuses to rule out rise in employers national insurance contributions
The prime minister again declined to rule out increasing employers’ national insurance contributions but insisted the Government would keep its manifesto promises.
He told the BBC: “We were very clear in the manifesto that we wouldn’t be increasing tax on working people and we expressly said that that was income tax, that was NICs etc.”
He added: “It wasn’t just the manifesto, we said it repeatedly in the campaign and we intend to keep the promises that we made in our manifesto.
“So I’m not going to reveal to you the details of the Budget, you know that that’s not possible at this stage.
“What I will say is where we made promises in our manifesto, we will be keeping those promises.”
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Starmer praises success of investment summit
The prime minister said the investment summit on Tuesday was a huge success.
He said: “These are investors with a huge amount of capital to to invest, but can choose where they invested. We made the case that now is the time to invest in Britain, and yesterday we’re able to announce £63bn pounds of inward investment into Britian.
“But for viewers what that means is investment into projects that are secured jobs in every part of the country.”
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The prime minister is now being interviewed outside Downing Street.
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Pinned: Reeves criticised for possible employer national insurance tax hike
Speculation that Labour is considering raising employer national insurance tax contributions has been renewed after Rachel Reeves refused to rule out the measure yesterday.
The hike would bring the levy up from its current flat rate of 13.8 per cent, with experts predicting it could raise around £17bn a year.
She said: “We are going to need to sort of close that gap between what government is spending and bringing in through tax receipts. But we are going to be a government that sticks to our manifesto commitments,” meaning not raising taxes on working people.
A Treasury source has also previously indicated that it is the view of the government that the move would be considered as a tax on business, and not working people, saying: “The commitments in the manifesto were clear and about protecting the incomes of working people.”
The Institute for Fiscal Studies’ Paul Johnson has called this into question, saying the move would be a “straightforward breach” of the Labour manifesto. However he added that it’s unlikely the party would be unable to avoid doing this in some way.
Shadow work and pensions secretary Mel Stride said it would be “absurd” for Labour to hike national insurance for employers and claim it was not a breach of the party’s manifesto.
Speaking to Sky News, he said Labour has “boxed themselves in” by “claiming they were not going to be a party that was going to have to put up taxes”.
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Sir Keir Starmer has welcomed the President of Cyprus to Downing Street, after the island played a central role in early efforts to get aid into war-torn Gaza.
Cypriot president Nikos Christodoulides made a whistlestop visit to No 10 before he heads to the United Nations in New York, where he hopes to open talks aimed at ending the decades-long ethnic divide on the island.
A UN buffer zone extends across Cyprus, dividing the Greek south from the north-eastern portion of the island, which is administered by an ethnically Turkish government only recognised by Turkey.
As the two sat for the media at the start of their meeting, the Prime Minister said: “It is my privilege to welcome you here and it is fantastic we have got this opportunity to discuss issues of mutual interest, a long and very important history between our two countries.
“Both at the country to country level, but also at the people to people level.
“We have a very proud community here and it gives great strength to us as a country.”
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