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The business secretary has suggested the government could put up national insurance for employers in the budget without breaking its election pledges.

Jonathan Reynolds told Sunday Morning with Trevor Phillips that Labour’s promise not to increase national insurance “was specifically in the manifesto, a reference to employees”.

National insurance is paid by both employees and employers and it has been unclear whether Labour’s vow not to increase the tax included both levies.

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In Prime Minister Question’s on Wednesday, Sir Keir Starmer refused to rule out increases to the tax.

The business secretary’s comments are the clearest indication yet that such a rise is being considered.

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We have ‘incredible’ investments

But coming on the eve of a major investment summit, the suggestion risks a row with companies – who would be hit by such a tax rise – and may prompt questions over the government’s commitment to economic growth.

It also comes on the heels of an argument with the firm DP World over comments made by the transport secretary that caused the company to review a £1bn London port investment.

“You know that pledge was taxes on working people… there’s a lot already in the manifesto, but you have to wait for the detail of a budget… this will be a budget for growth,” said Mr Reynolds.

Shadow work and pensions secretary Mel Stride said increasing employer national insurance would amount to a “tax on jobs” and “what they should be about is growth and increasing productivity”.

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Labour ‘talked the economy down’

With the budget just over a fortnight away, the chancellor has also strongly hinted that she is planning to tweak the rules that dictate how much the government is allowed to borrow for spending on infrastructure investment.

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Writing in The Sunday Times, Rachel Reeves said it was “time that the Treasury moved on from just counting the costs of investments, to recognising the benefits too”.

It has been reported that the Treasury is considering changing how it calculates debt by stripping out the value of assets it holds, such as transport or building infrastructure or the student loan book.

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Is a budget tax bombshell on the way?

This would bring down the headline government debt figure and allow the chancellor to borrow more money within her fiscal rule to have debt falling within a five-year forecast.

Crucially, such a move would not affect day-to-day spending so tax rises will likely still be needed to plug the hole in ongoing commitments.

But it would free up space for the Treasury take on more debt to spend on one-off projects – such as green technology, schools or hospitals – which ministers argue are essential to bring about economic growth.

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Supporters of such a change argue that the current approach fails to adequately capture the potential long-term economic benefits of borrowing to invest because of the five-year horizon within which debt must start falling.

Detractors say changing the fiscal rules in this way would amount to fiddling the figures to load the country up with liabilities.

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‘Big test’ for PM as ex-Labour MP Mike Amesbury steps down to trigger by-election

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'Big test' for PM as ex-Labour MP Mike Amesbury steps down to trigger by-election

Mike Amesbury has officially stepped down as an MP after he was convicted of punching a man in the street.

Amesbury, who was suspended from the Labour Party, was jailed on 24 February.

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He was sentenced to 10 weeks behind bars after he pleaded guilty to the assault by beating of 45-year-old Paul Fellows in Frodsham, Cheshire, in the early hours of 26 October.

Following an appeal, his sentence was suspended for two years – so he does not have to serve it in prison.

He announced his resignation as MP for Runcorn and Helsby in a social media post on Monday, describing the assault as a “deeply regrettable incident” for which he had “rightly been punished”.

“I am sincerely sorry to Paul Fellows, my family, colleagues and constituents,” he added.

A by-election will now be triggered in Runcorn and Helsby, where constituents will vote to elect a new MP.

Former Runcorn and Helsby MP Mike Amesbury (centre) leaving Chester Crown Court after he had his 10-week prison sentence for assault suspended for two years following an appeal. Picture date: Thursday February 27, 2025.
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Mike Amesbury leaving Chester Crown Court in February. Pic: PA

By-election a ‘big test’ for PM

It will be the first by-election since Sir Keir Starmer became prime minister, in what Sky News’ political correspondent Liz Bates said would be a “big test” in a seat where Reform UK came second last year.

“Losing it would be an unmitigated disaster given the 14,000 majority achieved last time round,” said Bates.

Amesbury came first in Runcorn and Helsby with 22,358 votes at the 2024 general election – equating to 52.9% of the electorate.

Reform UK came in second with 7,662 votes (18.1%) and the Tories in third with 6,756 votes (16%).

Reform has yet to announce a candidate, but Karen Shore, the deputy leader of Cheshire West and Chester Council, will run for Labour.

The Conservatives have opted for Sean Houlston, a membership services manager for the National Federation of Builders.

Read more:
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Sir Keir Starmer speaking to the media follow his 'coalition of the willing' virtual meeting. Pic: PA
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Sir Keir Starmer’s government has been polling very badly indeed. Pic: PA

When will the by-election be?

Under parliamentary procedure, an MP cannot simply resign but must be disqualified from holding their seat.

To do this, they must apply for a role in the paid office of the Crown, meaning they automatically lose their seat because working for the Crown is not seen as impartial.

Titles include the crown steward and bailiff of the Chiltern Hundreds and the Crown Steward and Bailiff of the Manor of Northstead.

Rachel Reeves has now appointed Amesbury to be steward and bailiff of the Three Hundreds of Chiltern, meaning the parliamentary seat is officially vacant.

Once he does, the chief whip will put forward a motion to Lindsay Hoyle, the Commons speaker, to officially begin the process of disqualifying the MP – known as “moving the writ”.

The Speaker then puts the motion to MPs for a vote. If they agree, the writ passes through the Commons and ends up with the returning officer in the local constituency who oversees the by-election.

The writ is typically issued within three months of the MP resigning from their seat and in doing so, the date of the by-election is fixed.

It could potentially coincide with the local elections in May.

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Welfare system will be here ‘for years to come’ amid backlash over impending cuts

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Welfare system will be here 'for years to come' amid backlash over impending cuts

The welfare state will be there for those who need it “now and for years to come”, the work and pensions secretary has said – as the government faces pressure from its own MPs over benefit changes.

Liz Kendall acknowledged there has been “lots of speculation” about the government’s plans to reform welfare, which are due to be announced on Tuesday following a delay because of concerns from Labour backbenchers.

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Speaking in the House of Commons, Ms Kendall said she wanted to assure the public the announcements will “ensure there is trust and fairness in the social security system” – and that it will remain in place for those who need it.

Earlier on Monday, Sky News revealed the government has chosen not to freeze the personal independence payment (PIP) next year following pressure from Labour MPs over the past week.

Ministers had wanted to stop PIP (a payment of up to £9,000 a year for people with long-term physical and mental health conditions, and disabilities) rising with inflation as part of a drive to cut the welfare budget.

The proposal had been set to save about £5bn, as Chancellor Rachel Reeves searches for savings.

She has lost £9.9bn of fiscal headroom (the amount she could increase spending or cut taxes without breaking her fiscal rules) since the October budget due to a poor economy and geopolitical events.

Read more:
Which benefits could be cut?

Why Labour MPs are so uncomfortable

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Will there be a backlash over benefits?

What’s the government’s case?

The government is expected to make qualifying for PIP more difficult when Ms Kendall reveals her plans on Tuesday.

Sky News’ deputy political editor Sam Coates, on the Politics At Sam And Anne’s podcast, said the Treasury is also expected to abolish the Work Capability Assessment, which determines whether someone is fit or not to work and to then receive disability payments.

The government has described the system as “dysfunctional”, as those “not fit for work” do not receive employment support or further engagement after the assessment, which could lock them out of future work altogether.

Sir Keir Starmer has made cutting the welfare budget a key project, as spending on sickness benefits soared to £65bn last year – a 25% increase since the year before the pandemic – and is expected to rise to £100bn before the next general election in 2029.

The number of people in England and Wales claiming either sickness or disability benefit has gone from 2.8 million to about four million since 2019.

Ms Kendall also revealed in the Commons the number of young people not working because of mental health conditions has risen by more than 25% in the last year, with the number considered “economically inactive” now reaching 270,000.

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‘1,000 people every day signing on to PIP benefits’

Unhappy Labour MPs

Ms Kendall had been expected to announce welfare cut plans last week.

But due to the scale of the backlash, the government took the unusual step of asking all 404 Labour MPs to attend “welfare roundtables” in Downing Street last week.

Sky News’ political correspondent Amanda Akass said Ms Kendall’s Commons appearance offered no real answers to the “serious concerns” raised by MPs, though social security minister Stephen Timms insisted they would “welcome” many of the changes when they are announced.

Treasury minister Emma Reynolds earlier played down the level of discontent over plans to freeze PIP, telling Sky News the roundtables were nothing more than “everyday business”.

She pointed out Labour created the welfare state in 1945, but said it needs to be “more sustainable”.

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‘Significant’ number of countries to provide troops to Ukraine peacekeeping force

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'Significant' number of countries to provide troops to Ukraine peacekeeping force

A “significant number” of countries will provide troops to a Ukraine peacekeeping force, Sir Keir Starmer’s spokesman said.

On Saturday, leaders from 26 Western countries – plus two EU leaders and NATO’s secretary general – gathered for a virtual call of the “coalition of the willing”, hosted by Sir Keir after Volodymyr Zelenskyy accepted a 30-day interim ceasefire agreement.

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The prime minister said military chiefs would meet this Thursday to discuss the next “operational phase” in protecting Ukraine as part of a peacekeeping force – if a deal can be agreed with Russia.

Speaking on Monday, Sir Keir’s spokesman said they now expect “more than 30” countries to be involved in the coalition – but did not reveal which other countries had joined since Saturday.

He added: “The contribution capabilities will vary, but this will be a significant force, with a significant number of countries providing troops and a larger group contributing in other ways.”

The spokesman did not say which countries agreed to be part of a peacekeeping force, which Sir Keir and French leader Emmanuel Macron have confirmed the UK and France will be part of.

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What could a peacekeeping force actually do?

Could troops end up fighting?

Russia has repeatedly said it would not accept soldiers from NATO countries being stationed in Ukraine.

Asked if British troops fired on by Russia in Ukraine would be allowed to fire back, the spokesman said: “It’s worth remembering that Russia didn’t ask Ukraine when it deployed troops.

“We’ve got operational planning meetings that they are going through.”

The spokesman also said he did not know if the US – notably absent from the coalition – will be joining the military chiefs’ meeting on Thursday, but said the UK is having “regular discussions with our American counterparts”.

Both the UK and France are pushing for the US to provide security guarantees to prevent Russia from reneging on any peace deal with Ukraine.

Read more:
Who’s in the coalition of the willing?

Follow live updates from the Ukraine war

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Which nations will join peacekeeping efforts?

Trump and Putin to hold talks

Last week, Russian President Vladimir Putin said he supports the truce brokered by the US in Saudi Arabia, but “lots of questions” remain over the proposals.

Donald Trump said on Sunday night he will speak to Mr Putin on Tuesday about ending the war and negotiators have already discussed “dividing up certain assets”, including land and power plants.

He said a “lot of work” had been done over the weekend on a peace deal.

The leaders involved in Saturday’s call were from: Australia, Belgium, Bulgaria, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Iceland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Spain, Sweden, Turkey, Ukraine, and the UK.

NATO Secretary General Mark Rutte, EU Commission President Ursula von der Leyen and EU Council President Antonio Costa also joined.

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