CHANCELLOR Rachel Reeves has hinted at a potential rise in National Insurance contributions for businesses. The announcement, made during a recent economic summit, has drawn sharp criticism from Scottish business leaders who warn of potential negative impacts on job creation and economic growth.
During the summit, Reeves pointedly stated that employers’ National Insurance contributions were not covered in Labour’s manifesto, which only promised not to “increase the key taxes paid by working people.” This careful wording has led to speculation that the government may be considering raising the employer portion of National Insurance to address what the Chancellor claims is a £22 billion black hole in public finances.
Prime Minister Keir Starmer, when questioned about the potential rise, refused to rule it out.
Scottish business leaders have reacted with concern to the possibility of increased National Insurance contributions. Many view such a move as potentially detrimental to Scotland’s economic recovery and job market.
A spokesperson for Scottish Business UK stated: “Any increase in employer National Insurance contributions would be a significant blow to businesses across Scotland. We’re still recovering from recent economic challenges, and such a tax hike could seriously impede job creation and investment.”
Craig Beaumont, executive director at the Federation of Small Businesses, said a rise in National Insurance would “make every job in all our local communities more expensive to maintain”.
“You don’t get to a pro-small-business Budget without the government honouring its cast-iron manifesto commitment to not increase National Insurance contributions, including on small employers,” he said.
Alex Veitch, director of policy at the British Chambers of Commerce said: “Firms are run by working people.”
“Nearly all UK companies are small, with many family-owned, and they are the anchors in our local economies,” he added.
The Chancellor has emphasised the need to restore fiscal and economic stability, stating that balancing the books is crucial for both government and business investment. However, critics argue that increasing taxes on businesses could have the opposite effect, potentially stifling growth and deterring investment.
Veitch said while the chancellor did have to make “difficult decisions”, raising employer National Insurance contributions would “simply hobble growth and lead to businesses having less money to invest in their staff”.
He called on any tax rises to be “countered” by steps to incentivise investment, especially for smaller companies.
