Difficult decisions for employers after national insurance hike, says minister
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Employers face “difficult decisions” as a result of Government moves to increase their national insurance contributions (NICs), according to a Treasury minister. James Murray’s remarks came as he defended legislation designed to introduce the main tax rise in the Labour Government’s autumn budget from April 2025, amid Tory warnings that the policy will see “50,000 jobs destroyed”.
Measures contained in the National Insurance Contributions (Secondary Class 1 Contributions) Bill include increasing the rate of employers’ NICs by 1.2 percentage points to 15%, with payments starting when an employee earns £5,000, down from the current £9,100.
The Bill cleared the House of Commons on Tuesday evening after MPs voted 354 to 202, majority 152, in favour of giving it a third reading. Mr Murray told MPs: “This Bill seeks to put into law one of the toughest decisions we made at the budget in October.
“We recognise that there will be impacts on employers as a result of the changes, with employers themselves facing difficult decisions. “It will implement a difficult but necessary decision that, along with others, is critical to raising the revenue needed to fix the public finances, to get public services back on their feet and to restore economic stability.”.
The Treasury estimates the policy could raise £25.7 billion a year. But the Office for Budget Responsibility (OBR) believes the actual amount of money generated for the Exchequer will be around £16.1 billion by 2029-30 as firms curb wage rises, cut hours and reduce profits while public sector employers get compensation in their budgets for the change.
