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Chancellor Rachel Reeves has admitted that it will not be “easy” for businesses to “absorb” the rise in employers’ national insurance contributions.
The change, which was announced in the autumn budget, will see employers’ NI contributions rise to 15% from April 2025.
Speaking at The Yorkshire Post’s Great Northern Conference in Hull, Reeves said: “I’m not going to pretend that it’s going to be easy for businesses, or indeed for charities or local authorities, to absorb, especially, the national insurance increase.
“But we made a comitment during the general election that we wouldn’t increase taxes on working people, because over the last few years it has been working people that have had to bear the brunt of tax increases.”
Citing Labour’s election campaign promise not to increase income tax, VAT or national insurance on employees, Reeves maintained that the party had “managed to stick to that manifesto commitment”.
However, the Conservatives have argued that, because Labour did not specify between employee and employer contributions, it did not stick to its manifesto pledge.
The chancellor has also not ruled out further tax rises in the coming years, despite saying the opposite at the Confederation of British Industry’s annual conference last Monday (25 November).
Following the Hull conference, Reeves added: “I have now set the envelope for government spending for the next few years so I’m not going to need to come back and top that up, either with more borrowing or more taxes.
“Now, I can’t write five years’ worth of budgets in just five months – we don’t know what might happen in the future in terms of shocks to the economy – but I can give businesses the confidence in this budget we have wiped the slate clean, we will never have to do a budget like this again.”
