Reeves hints at budget increase in employer national insurance

Rachel Reeves has dropped her strongest hint yet that she is planning to raise employer national insurance contributions in the budget, prompting accusations that Labour is about to break a manifesto promise.

- Richard Partington, Kiran Stacey

The chancellor used the government's international investment summit at London's Guildhall yesterday to warn of coming tax rises, insisting that business would understand the need for fiscal stability.

After days of rumours that Reeves was planning to increase employer national insurance contributions, she refused to rule out doing so. "We will stick to the commitments we made in our manifesto," she said. "But you know there is a £22bn black hole over and above anything we knew about going into the election that we need to fill, and that's not just a one year, that persists throughout the forecast period.

“So we are going to need to sort of close that gap between what government is spending and bringing in through tax receipts.

"But we are going to be a government that sticks to our manifesto commitments, including that one [on not raising taxes on working people]."

Introducing national insurance on employer pension contributions could raise £17bn a year for the exchequer, while putting up regular employer national insurance by 1p would bring in about £8.5bn.

Reeves's message was underlined by Keir Starmer, who told the summit in his keynote speech: "Our public services need urgent care, our public finances need the tough love of prudence - challenges we can't ignore. Because we know, just as every leader here knows, that those early weeks and months are precious, and no matter how many people advise you to ignore it, that you must run towards the fire to put it out, not let it spread further."