It came amid growing fears of an increase in employer national insurance contributions (NICs) in this month’s Budget.
In a growing backlash, companies and business groups said any such rise would come back to bite working people. Such a tax raid is likely be passed on to employees in the form of smaller pay increases.
The last time employer NICs were put up, in 2021, the independent Office for Budget Responsibility predicted that would happen.
It calculated that 80 per cent of the hike would be shouldered by workers in the form of lower wages and 20 per cent passed on to consumers via higher prices.
Businesses yesterday sounded the alarm over Labour ‘s double whammy of tax hikes and new workers’ rights, with Rachel Reeves’ Budget this month set to up employer national insurance contributions (NICs)
James Reed, boss of recruitment firm Reed, said: ‘This is not the time… to pile costs and complexity on hard-pressed employers’
The head of the Institute for Fiscal Studies, Paul Johnson, said the Labour manifesto was ‘clear’ on NICs
Julian Jessop, economics fellow at the Institute of Economic Affairs, a free-market think-tank, said it was the latest evidence that the increase would be a tax on ‘working people’.
The prospect of national insurance rises is making employers more reluctant to recruit, critics warned yesterday.
At the same time it is feared that new employment rights already announced, including ‘day one’ entitlements for new staff, will deter hiring.
James Reed, boss of recruitment firm Reed, said: ‘This is not the time… to pile costs and complexity on hard-pressed employers.Â
‘Not the time to increase employers’ national insurance. And not the time to impose day one employment rights that will deprive firms of the ability to safely end the employment relationship if they feel it is not working out.’
Employers currently pay national insurance at a rate of 13.8 per cent.
Accountants RSM calculate that an increase of one percentage point to 14.8 per cent would raise £8.5billion a year for the Treasury – as Chancellor Rachel Reeves seeks to fill a £22billion hole she claims to have discovered in the public finances.
But Charlie Barnes, head of employment at RSM, said: ‘Increasing employer NICs will hit workers in the pocket when employers are reviewing future plans on remuneration and reward.’
