Raising employer NI ‘not consistent’ with Labour manifesto and could lead to ‘fewer jobs’

Published

1 year ago

October 16, 2024

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Hiking employer national insurance (NI) “doesn’t look consistent” with Labour’s manifesto and could lead to job losses in the long term, the head of an influential thinktank said.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), told Sky News’ Politics Hub With Sophy Ridge that employer NI ultimately “comes from the pay of the employee” and increasing it could result in “less pay rises” and “possibly fewer jobs”.

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Sir Keir Starmer has refused to rule out raising national insurance for employers in the upcoming autumn budget.

Some have suggested this would break a 2024 manifesto pledge which said Labour will not increase national insurance, income tax or VAT.

The prime minister claimed on Tuesday that it was clear this meant not “increasing tax on working people” – leaving the door open for the employer element of NI to go up.

But Mr Johnson said: “I think if we got a straightforward increase in the rate of employer national insurance, that certainly doesn’t look consistent with a very clear statement in the Labour manifesto: ‘We will not raise national insurance contributions’.

“It does not specify employee national insurance contributions.”

Companies pay NI at a rate of 13.8% on all employees’ earnings above £175 per week, but pension contributions made by employers are currently exempt from the levy. This is what experts suggest could be targeted.

Separately, employees and the self-employed pay NI on their earnings, which comes off their payslip.

Ministers have insisted this element will not go up when Chancellor Rachel Reeves delivers her budget later this month, in which she will lay out measures to fill a £22bn “black hole” in the nation’s finances.

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However, Mr Johnson suggested that the impact of any increase to employer NI would ultimately fall on the worker.

“The sort of economic theory tells you that’s what’s likely to happen and the empirical evidence is that that’s what does happen, that if you increase that in the longer term, it results in less in the way of pay rises,” he said.

He added: “In the end, all taxes are paid by people.

“They have to be either paid by the shareholders of the firms that are paying it or the customers or the employees.

“Most of the theory and the evidence suggests that most of the increase will be felt by employees in lower wages, probably, but possibly in the longer term, fewer jobs than there otherwise would have been. I mean, this is very, very similar in the long term to an increase in employee national insurance contributions.”

‘Jobs tax bad for the economy’

Mr Johnson’s view was shared by Craig Beaumont, the executive director of the Federation of Small Business.

He called employer NI a “jobs tax” and said if anything it should be reduced rather than raised.

“If you increase it you would see fewer jobs,” he told Sky News.

“The small business looking at that will go well, what do I do now?

“Do I cut costs? Do I increase my prices? Do I reduce jobs? Reduce hours? Do I look at the pension contributions? Every single option from that is a bad one for the economy.”

Politics

Budget 2025: Consumer confidence falls as speculation ramps up – but London mayor welcomes major rail investment

Published

2 hours ago

November 20, 2025

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Budget 2025: Consumer confidence falls as speculation ramps up - but London mayor welcomes major rail investment

Consumer confidence has tumbled amid rampant speculation about what the chancellor will announce in the budget, figures show.

The British Retail Consortium (BRC) blamed “strong hints” from the government of income tax hikes for the public’s falling expectations of how much they’ll spend over the next three months – even as Christmas beckons.

While a planned increase in income tax rates was scrapped last week, Sir Keir Starmer has refused to rule out freezing income tax thresholds – which the Conservatives argue amounts to a tax rise by stealth because it drags people into paying higher rates even if their wages increase.

BRC chief executive Helen Dickinson said months of uncertainty had “heightened public concern about their own finances and the wider economy”.

Consumer expectations for the state of the economy over the next three months have fallen significantly to minus 44, down from minus 35 in October, according to data from the BRC and Opinium.

Ms Dickinson said action was needed from Rachel Reeves to “bring down the spiralling cost burden facing retailers”, which she said would “keep price rises in check”.

Signs of ‘fragile’ recovery in jobs market

In slightly more encouraging news for Ms Reeves ahead of her statement next Wednesday, new research suggests the jobs market may be on the up.

The Recruitment and Employment Confederation said the number of new job adverts last month was 754,359, up by 2.1% from September, taking the total to more than 1.6 million.

Ms Reeves’s decision to hike national insurance contributions for employers in last year’s budget was blamed for a slowdown in the market, and a rising unemployment rate.

The report said there has been an increase in adverts for medical radiographers, delivery drivers and couriers, and further education teaching professionals.

But it warned the apparent recovery was “fragile”.

Reeves set to back DLR extension

One man looking forward to the budget is Sir Sadiq Khan, who has welcomed reports that London’s DLR is set to be given funding for an extension.

According to the Press Association, the chancellor will back an extension to the Docklands Light Railway to Thamesmead at a cost of £1.7bn – unlocking thousands of new homes.

Thamesmead has been notoriously short of public transport links ever since it was developed in the 1960s.

The plan would see the line extended from Gallions Reach, near London City Airport, and include a new station at Beckton as well as in Thamesmead itself.

Sir Sadiq said the DLR extension “will not only transform travel in a historically under-served part of the capital but also unlock thousands of new jobs and homes, boosting the economy not just locally but nationally”.

It is also expected to unlock land for 25,000 new homes and up to 10,000 new jobs, along with almost £18bn of private investment in the area.

Politics

Prospective CFTC chair addresses DeFi regulation at nomination hearing

Published

8 hours ago

November 19, 2025

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Prospective CFTC chair addresses DeFi regulation at nomination hearing

Michael Selig, who serves as chief counsel for the crypto task force at the US Securities and Exchange Commission, faced questions from lawmakers on the Senate Agriculture Committee for his nomination to be the next chair of the Commodity Futures Trading Commission.

On Wednesday, Selig appeared before the committee and addressed questions and concerns from lawmakers on both sides of the aisle regarding his potential conflicts of interest, policy views and experience as the next CFTC chair, succeeding Caroline Pham.

Government, Senate, SEC, CFTC, United States — *Michael Selig addressing lawmakers on Wednesday’s confirmation hearing. Source:* *US Senate Agriculture Committee*

In his opening statement, Selig said he had advised a wide range of market participants, including digital asset companies, and warned against the agency taking a regulation-by-enforcement approach, stating that it would drive companies offshore.

“We’re at a unique moment in the history of our financial markets,” said Selig. “A wide range of new technologies, products, and platforms are emerging […] the digital asset economy alone has grown from a mere curiosity to a nearly $4 trillion market.”

The confirmation of Selig, whom US President Donald Trump nominated to chair the CFTC following the removal of his first pick, Brian Quintenz, is expected to head for a vote soon. According to the Senate calendar, the Agriculture Committee is scheduled to discuss his nomination on Thursday.

Addressing DeFi, crypto enforcement, roles of agency

The prospective CFTC chair responded to questions from the committee chair, Senator John Boozman, who advocated for the agency to take a leading role in regulating spot digital commodity markets. The senator’s remarks came as the committee is expected to consider a market structure bill that would give the CFTC more authority to regulate crypto.

“The CFTC, and only the CFTC, should regulate the trading of digital commodities,” said Boozman.

The Arkansas senator questioned Selig about his potential approach to decentralized finance if he were to be confirmed, an issue that reportedly divided many lawmakers on the market structure bill.

“When we’re thinking about DeFi, it’s something of a buzzword, but really we should be looking to onchain markets and onchain applications and thinking about the features of these applications as well as where there’s an actual intermediary involved […]” said Selig.

He added that it was “vitally important that we have a cop on the beat” in response to a question on regulating crypto, specifically spot digital asset commodity markets.