Reeves 'to raid employee pension contributions'

Rachel Reeves will reportedly target employee pension contributions in a bid to raise more money and fill a black hole in the public finances at this month's crunch Budget.

- JAMES C. REYNOLDS MILLIE COOKE

The chancellor is said to be preparing to cap the amount of someone's salary that can be sacrificed for extra pension contributions before national insurance contributions are incurred to £2,000 a year. The move would offer a smaller boost to the public finances, mostly affecting high earners.

Sources told The Times employee contributions of more than £2,000 a year would be subject to national insurance, a move that could raise up to £2bn per year.

It comes at the end of a week in which Ms Reeves reportedly told the Office for Budget Responsibility (OBR) that she intends to increase income tax in the budget, which will be unveiled on 26 November.

Despite Labour's manifesto pledge to the contrary, she is said to be weighing a 2p rise in income tax, balanced by a 2p cut in national insurance in order to effectively cancel out the burden on workers.