Chancellor Rachel Reeves has recently acknowledged the significant challenges that businesses, charities, and local authorities will face due to the planned increase in employers’ national insurance contributions. Starting in April 2025, this rate will rise to 15%, which has raised concerns across various sectors about the financial strain it may impose. Speaking at The Yorkshire Post’s Great Northern Conference in Hull, Reeves candidly remarked, “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.”
Reeves also emphasized Labour’s commitment made during the general election not to raise taxes on working individuals. She pointed out that the party has kept its promise by avoiding increases in income tax, VAT, or national insurance for employees. This approach aims to ease the financial burden on working people who have already been facing rising taxes over recent years.
However, the Conservative Party has criticized Labour for allegedly breaching its manifesto pledge by not clearly differentiating between employee and employer contributions. They argue that this lack of clarity undermines the promise made to working individuals. Reeves acknowledged that the need for increased taxes has particularly targeted national insurance and taxes on wealthier individuals.
This situation reflects ongoing discussions about tax policy and its implications for various sectors in the UK economy. Business leaders have expressed strong concerns about how this increase could lead to job losses and hinder economic growth. For instance, celebrity chef Tom Kerridge warned that the national insurance hike might result in a significant number of restaurant closures, highlighting the potential ripple effects on employment and services.