Sir Keir Starmer refuses to rule out increasing national insurance for employers in budget
Sir Keir Starmer has refused to rule out raising national insurance for employers in the upcoming autumn budget.
The prime minister would only say Labour’s manifesto promised not to increase national insurance “for working people” when asked if he was going to break a pledge by increasing the tax for employers in the 31 October budget.
“We were very clear in the manifesto, that we wouldn’t be increasing tax on working people,” he told the BBC.
“It’s very clear from our manifesto that what we were saying is we’re not going to raise taxes for working people.
“What I will say is where we made promises in our manifesto. We’ll be keeping those promises.”
National insurance contributions are the UK’s second-largest tax, and are expected to raise just under £170bn in 2024-25, about a sixth of all tax revenue, according to the Institute for Fiscal Studies (IFS).
They are paid by employees and the self-employed on their earnings, and by employers on the earnings of those they employ – at a higher rate than employees pay.
National insurance is not paid by employers on pension contributions they make to employees, which is what experts have said could be targeted.
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During the election campaign, now Chancellor Rachel Reeves explained “working people are people who go out to work”.
She told Sky News: “Sort of by definition, really, working people are those people who go out and work and earn their money through hard work.”
The government has been facing questions over whether it will raise national insurance contributions for employers over the past week after former prime minister Rishi Sunak asked Sir Keir if their commitment applies to both employer and employee contributions at last Wednesday’s Prime Minister’s Questions.
Sir Keir dodged the question twice by saying his government made “an absolute commitment” to not raise taxes on working people.
Business Secretary Jonathan Reynolds then gave a large hint to Sky News’ Sunday Morning with Trevor Phillips programme the government will be putting up the tax for employers.
“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,” he said.
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Ms Reeves then gave her strongest hint yet she is planning to hike up the tax for employers.
Speaking at the government’s international investment summit on Monday, she said: “We will stick to the commitments we made in our manifesto.
“But you know there is a £22bn black hole over and above anything we knew about going into the election that we need to fill, and that’s not just a one year, that persists throughout the forecast period.
“So 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, including that one [on not raising taxes on working people].”
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A minister has defended Sir Keir Starmer’s decision to discipline rebellious MPs, saying they would have used “stronger” language against those who are “continually causing trouble”.
Home Office minister Jess Phillips told Sky News’ Matt Barbet that Labour MPs were elected “as a team under a banner and under a manifesto” and could “expect” to face disciplinary action if they did not vote with the government.
It comes after the prime minister drew criticism for suspending four Labour MPs who voted against the government on its flagship welfare bill earlier this month, while stripping a further three of their roles as trade envoys.
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Brian Leishman, Chris Hinchliff, Neil Duncan-Jordan and Rachael Maskell.
Pic: Uk Parliament
Brian Leishman, Chris Hinchliff, Neil Duncan-Jordan and Rachael Maskell all lost the whip, meaning they are no longer part of Labour’s parliamentary party and will sit as independent MPs.
Labour backbenchers lined up to criticise the move last night, arguing it was a “terrible look” that made “a Reform government much more likely”.
But speaking to Sky News, Ms Phillips said: “We were elected as a team under a banner and under a manifesto, and we have to seek to work together, and if you are acting in a manner that is to undermine the ability of the government to deliver those things, I don’t know what you expect.
“Now I speak out against things I do not like, both internally and sometimes externally, all the time.
“There is a manner of doing that, that is the right way to go about it. And sometimes you feel forced to rebel and vote against.”
Referring to a description of the rebels by an unnamed source in The Times, she said: “I didn’t call it persistent knob-headery, but that’s the way that it’s been termed by some.”
She said she would have described it as “something much more sweary” because “we are a team, and we have to act as a team in order to achieve something”.
More than 100 MPs had initially rebelled against the plan to cut personal independent payments (PIP). Ultimately, 47 voted against the bill’s third reading, after it was watered down significantly in the face of defeat.
Three other MPs – who also voted against the government – have had their trade envoy roles removed. They are Rosena Allin Khan, Bell Ribeiro-Addy and Mohammed Yasin.
However, it is understood this was not the only reason behind the decision to reprimand all seven MPs, with sources citing “repeated breaches of party discipline”.
Ms Maskell was one of the lead rebels in the welfare revolt, and has more recently called for a wealth tax to fund the U-turn.
Mr Hinchliff, the MP for North East Hertfordshire, proposed a series of amendments to the flagship planning and infrastructure bill criticising the government’s approach.
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Mr Duncan-Jordan, the MP for Poole, led a rebellion against the cut to the winter fuel payments while Alloa and Grangemouth MP Mr Leishman has been critical of the government’s position on Gaza as well as the closing of an oil refinery in his constituency.
Ian Byrne, the Labour MP for Liverpool West Derby, wrote on X on Wednesday that the prime minister’s actions “don’t show strength” and were “damaging Labour’s support and risk rolling out the red carpet for Reform”.
Leeds East MP Richard Burgon added that “challenging policies that harm our communities” would “make a Reform government much more likely”.
Ian Lavery, Labour MP for Blyth and Ashington, warned the suspensions were “a terrible look”.
“Dissatisfaction with the direction the leadership is taking us isn’t confined to the fringes,” he wrote.
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