A hike on 'employer' NI is still a tax on working people

Ahead of her first-ever Budget, speculation is mounting that chancellor Rachel Reeves will hike up employer national insurance contributions (NICs).

- JAMES MOORE

At first glance, this may seem as though Labour is keeping its pre-election promise to not clobber “working people” – but make no mistake: this plan very much will impact hard-working folk.

Employer NICs are often referred to as a “jobs tax” – and with good reason. You see, when you increase them, you make it more expensive for businesses to hire people, and there are two ways employers tend to address this: firstly, by cutting the number of people on payroll (be that via redundancy or by creating fewer positions); secondly, by paying workers less to balance out their losses.

“Working people” might not see a direct impact if they look at the national insurance section on their post-Budget payslips, but that doesn’t mean it won’t hurt them down the line. This is perhaps the ultimate stealth tax – and no one seems to be calling Labour out on it.

The party manifesto might not have specified employer national insurance would be protected – but it did outline that it would safeguard employees. And to me, this is a clear breach of that promise.

Now, Reeves would argue – as, indeed, she has on numerous occasions – that she is facing a fiscal black hole of £22bn, caused by her Tory predecessors. So it would make sense, in her eyes (and Keir Starmer’s, for that matter), to plug that gaping hole by taxing those whose “shoulders are broadest”.