Budget: Rachel Reeves has left herself with very few political levers to pull to get hold of large sums of cash
In a classic piece of political understatement, a government source justified the coming £20bn rise in employer national insurance as “asking businesses to help out”.
This language of throwing a few quid in the collection pot belies the size of this tax hike.
It is huge. But that’s the point.
Having ruled out pushing up the big revenue raisers, Rachel Reeves has left herself with very few levers to pull to get hold of large sums of cash.
This move will be the largest tax rise in the budget, filling half of the £40bn the chancellor is trying to find.
The fact that national insurance is paid by businesses big and small increases the size of the net – meaning relatively small headline changes can yield big sums.
That’s also the downside though.
Groups representing small companies have already said this will make jobs harder to create and maintain.
So what of the politics?
At £20bn, the value of these tax rises mirrors almost exactly the cost of all 4p worth of cuts to employee national insurance pushed through by the last Tory government (with the support of Labour).
We’re essentially seeing a shift in the national insurance burden from workers to businesses.
But again, maybe that’s the point.
Analysis: Are Starmer and Reeves on the same page?
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Those with assets ‘not working people’
Much has been made of the fuzziness around Sir Keir Starmer’s attempts to define who the ‘working people’ are that he is seeking to protect from tax rises.
Government comms on the matter have been clunky.
But there’s also been something of a misreading of what that two-word phrase represents.
For some this has been a conscious and political choice.
Such as when one Tory MP suggested the prime minister believed anyone who owns a (tax-free) ISA doesn’t count as a working person.
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Will the chancellor’s fiscal plan work?
In fact, isn’t it more likely that the now fabled ‘working person’ was never meant as a technical definition, but rather a statement of political intent?
Consider these statements – reproduced here without endorsement – that Labour would like you to ingest:
If you’re among the 97% who doesn’t pay capital gains tax, we’re on your side.
If you’re among the 94% who doesn’t pay inheritance tax, we’re on your side.
Much has been made of Sir Keir’s definition of ‘working people’. Pic: PA
And yes, if you’re among the overwhelming majority of people whose biggest tax outlays are income tax, national insurance and VAT, we’re on your side too.
Set against that backdrop – even if we’re still unclear about who a ‘working person is’ – it becomes pretty obvious who the prime minister believes is not one.
And it’s a familiar and traditional Labour answer.
It’s the 1% as opposed to the 99%. The few, not the many. The rich rather than the poor.
But drawing a line like that when it comes to policy is harder.
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The modest-earning family with a few stocks and shares may wonder why they are now thrown in with the serial investors.
The small family-run bakery will ask why they are seeing their payroll taxes whacked up alongside the big corporates.
And economists will argue that business taxes like national insurance are always ultimately paid by workers eventually in the form of lower wages and fewer jobs.
Which leads us to what will likely be one of the central tensions in the budget.
The only solution to pay for public services in the long term is economic growth.
But can that growth be achieved when the interim funding fix relies on upping taxes on the rich and the private sector?
The chancellor will try to square that circle on Wednesday by announcing billions of pounds of extra investment borrowing.
But firms may still feel the government has bought them a fancy pair of trainers only to then break both their legs.
A woman who claimed to be Madeleine McCann has pleaded not guilty to stalking the missing girl’s parents.
Julia Wandel, 23, is accused of making calls, leaving voicemails, and sending a letter and WhatsApp messages to Kate and Gerry McCann.
Wandel, from southwest Poland, is also accused of turning up at their family home on two occasions last year and sending Instagram messages to Sean and Amelie McCann, Madeleine’s brother and sister.
It is alleged she caused serious alarm or distress to the family between June 2022 and February this year when she was arrested at Bristol Airport.
She claimed to be Madeleine on Instagram in 2023, but a DNA test showed she was Polish.
Karen Spragg, 60, who is alleged to have made calls, sent letters and attended the home address of Mr and Mrs McCann, also denied a charge of stalking at Leicester Magistrates’ Court.
Wandel was remanded back into custody while Spragg, from Caerau in Cardiff, was granted conditional bail.
Both women are due to appear at Leicester Crown Court for trial on 2 October.
Karen Spragg arriving at Leicester Magistrates’ Court on Tuesday. Pic: PA
Madeleine’s disappearance has become one of the world’s most mysterious missing child cases.
She was last seen in Portugal’s Algarve in 2007 while on holiday with her family.
Her parents had left her in bed with her twin siblings while they had dinner with friends at a nearby restaurant in Praia da Luz when the then three-year-old disappeared on 3 May.
A man suspected of kidnapping Madeleine will not face any charges in the foreseeable future, a prosecutor told Sky News earlier this year.
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