Rachel Reeves Set to Drop NICs Bombshell—Top Expert Issues Urgent Warning
Rachel Reeves’s decision to raise employer National Insurance contributions has officially kicked in today, and business leaders are already sounding the alarm over the potential fallout. The hike, which bumps contributions up from 13.8% to 15%, comes alongside a big drop in the payment threshold – from £9,100 to just £5,000. And for many employers already stretched thin, this latest move feels like another blow they can’t afford.
Ministers are warning that the changes, especially when combined with the recent 6.7% rise in the minimum wage, could push struggling businesses over the edge. Concerns are swirling around what this might mean for jobs, with fears that some roles could be cut altogether, according to the Express.
Kate Nicholls, boss of UKHospitality, didn’t mince her words. “The increases to employer National Insurance contributions are going to hit businesses and workers right across the UK,” she said. “The impacts will be stark, with hours for staff reduced, trading hours shortened, prices increased and, in the worst-case scenario, jobs lost.”
She also pointed out the wider damage this could cause, saying it doesn’t just affect the venues and local communities but actually threatens the government’s goal of getting more people into work. “It needs sectors like hospitality to create the jobs to get people out of the welfare system, but these tax rises will have the opposite effect on job creation.”
The Chancellor announced the plan in last year’s Budget, estimating it could raise £25 billion annually by 2029. She insisted at the time that it wasn’t a decision she’d made lightly.
But the backlash hasn’t let up. The Conservatives have slammed the rise as a “jobs tax,” with Shadow Business and Trade Secretary Andrew Griffith warning it could be the final straw for many firms. “British firms are already on their knees – now Labour delivers a one-two punch that could flatten them,” he said. “They don’t understand that it’s business, not big government, that drives growth.”
Griffith added that unless the government changes course quickly, “working people will pay the price.” And it’s not just businesses feeling the squeeze. As the new tax takes effect, households are also facing fresh hits from Council Tax and energy bill increases, adding even more pressure to already stretched budgets.
Sir Keir Starmer acknowledged that the cost-of-living crisis is far from over, but pointed to the minimum wage boost as a win for millions. “I think for most people, they would say the cost-of-living crisis is ongoing,” he told Sky News. “The national living wage going up today by an average of £1,400 is going to affect millions of people.”