Treasury: employer tax hikes could reduce employment

It has not been Rachel Reeves’s year. From accusations of CV embellishment to noisy backlash over the farmer’s tax, the Chancellor has been fighting on all fronts as she battles her way towards the Spring spending review. And now, in yet another blow for Reeves, it transpires that her plans to increase the amount of tax paid by employers are predicted to lead to, er, a decrease in Britain’s active workforce. Talk about lose-lose…

The Treasury’s James Murray admitted today, in response to a parliamentary question from Tory MP Wendy Morton, that the impact assessment of the effects of Labour’s proposed employer national insurance contribution (NIC) hike hasn’t yielded wholly positive results. The Ealing North MP noted that, from 2025/26 onwards, the Office for Budget Responsibility expects the tax rise to lead to a reduction in the participation rate – the proportion of Brits in work or seeking work – by 0.1