Employers face 'difficult decisions' after Government hikes national insurance, says minister
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A Treasury minister has cautioned that the increase in national insurance contributions (NICs) set by the government could force employers into "difficult decisions". James Murray backed the Labour Government's move, which is part of the autumn budget to be introduced from April 2025, even as Conservatives suggest it could result in "50,000 jobs destroyed". The National Insurance Contributions (Secondary Class 1 Contributions) Bill proposes boosting the employers' NICs rate by 1.2 percentage points to 15%, lowering the earnings threshold to £5,000 from £9,100.
After a vote of 354 to 202, with a majority of 152, MPs passed the bill on Tuesday evening at its third reading. Addressing Parliament, Mr Murray commented: "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.".
An estimated £25.7bn a year is expected to be raised through this policy, according to the Treasury. The Office for Budget Responsibility (OBR) estimates that the actual revenue raised for the Treasury will be around £16.1bn by 2029-30, as companies are expected to limit wage increases, reduce hours, and cut profits, while public sector employers receive budget compensation for the changes.
