Starmer refuses to rule out raising employers’ national insurance

Sir Keir Starmer has insisted the government will keep its manifesto promises on tax but has not ruled out increasing employers’ national insurance contributions.
The prime minister warned that “tough” decisions would need to be made in the budget, due at the end of this month, as he faced accusations he was set to breach Labour’s manifesto pledge.
During the election campaign, Labour said it would not raise national insurance when in government. Starmer and Rachel Reeves, the chancellor, have insisted this was part of their promise to not raise taxes on “working people” but would not rule out increasing the portion paid by the employer.
Paul Johnson, director of the Institute for Fiscal Studies, told Times Radio that raising ­employer contributions “would be a straightforward breach of a manifesto commitment”.
But Starmer told the BBC that Labour had been “very clear in the manifesto that we wouldn’t be increasing tax on working people”.
He added: “It wasn’t just the manifesto, we said it repeatedly in the campaign and we intend to keep the promises that we made in our manifesto.”
It comes as Reeves warned businesses on Monday that taxes would have to rise.
The chancellor argued that political and economic stability was more ­important to business investment than tax levels, as she also insisted that Labour had never promised not to raise employer national insurance contributions.
Starmer received a boost after the world’s biggest asset manager said that Britain could become “the next ­real destination for capital”, after investment talks in which ministers boasted of £63 billion worth of deals.
Larry Fink, the chief executive of BlackRock, told Reeves at a panel event: “I believe the policies that are being discussed with this administration now [are] really opening up our eyes that this might become the next real destination for capital.”
The prime minister said he was ­“determined to get our economy moving through the shock and awe of ­investment”, but senior business leaders at the summit expressed ner­vousness about his plans for tax rises.
Sir Nicholas Lyons, chairman of the FTSE 100 insurer Phoenix, warned: “Whenever you think about taxing ­employers, you’re taxing jobs, you’re taxing enterprise. You have to look at the potential collateral damage.”
Craig Beaumont, executive director at the Federation of Small Businesses, which represents more than 500,000 small and medium-sized enterprises, said: “Hiking new costs on to jobs by small employers is simply not what a pro-growth Treasury would do.”
Eric Schmidt, the former chief ­executive of Google, also told the prime minister that the UK would benefit from having a “minister of ­anti-regulation” to cut red tape. “The cost of ­capital and the delay is ­killing you, and furthermore you’re not going to achieve your 2030 energy goal, which is laudable, without fixing this,” he said.
Senior ministers spent the day ­attempting to convince global investors that Britain was “open for business” as Starmer pledged to “repair Britain’s brand as an open, outward-looking, confident trading nation”.
However, Starmer also warned of “tough love” for public finances in the budget on October 30, as he and Reeves prepared the ground for tax rises. The prime minister said suggestions of capital gains tax rising to 39 per cent were “wide of the mark” but argued that other tax rises would not deter investment in Britain.
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“Tax is not the first thing businesses and investors are raising with me,” he said. Reeves insisted “businesses get” the need for tax rises to balance the books.
“I don’t regard it as a dilemma between returning the economy to a path of stability on the one hand and ­attracting investment on the other,” she told reporters. “The precondition for bringing investment into a country is economic and fiscal stability.”
Arguing that recent policy upheavals had “put off investors”, Reeves promised a “business tax roadmap” at the budget to give certainty for the years ahead, including a commitment not to increase corporation tax.
Reeves fuelled growing expectations that she would increase the national insurance contributions made by ­employers, worth up to 13.8 per cent of a worker’s salary.
She said that employers’ contributions were “not in the manifesto”, arguing: “We were really clear in our manifesto that we weren’t going to increase the key taxes paid by working people.”
Labour’s manifesto stated: “Labour will not increase taxes on working people, which is why we will not ­increase national insurance, the basic, higher, or additional rates of income tax, or VAT.”
Laura Trott, the shadow chief secretary to the Treasury, said: “Regardless of what they say, it’s obvious to all that hiking employer national insurance is a clear breach of Labour’s manifesto.”
However, Labour sources pointed out that Trott had criticised Reeves during the campaign for “conspicu­ously” refusing to rule out increasing employer contributions.