The Telegraph has run an article under the heading ‘Labour’s tax on jobs ‘will scare away business’

The whole article can be read here (subscription may be necessary) and says that the potential rise in employers’ National Insurance (NI) contributions by the Labour government has sparked significant concern among business leaders and politicians. Jonathan Reynolds, the Business Secretary, hinted that Labour might increase employers’ NI contributions, while maintaining a manifesto commitment not to raise NI for workers. Critics, including Conservatives like Robert Jenrick, have labeled this as a “tax on jobs,” warning that it could stifle job creation and economic growth.

Business leaders argue that such a move would deter investment and increase the cost of hiring. For example, Lloyds Bank CEO Charlie Nunn stated that raising employer NI contributions would act as a “handbrake” on investment, particularly in areas like pensions, which already face a significant funding gap. Additionally, Kate Nicholls, CEO of UK Hospitality, pointed out that increasing NICs would make it more expensive to recruit and expand, hindering recovery in sectors like hospitality that are still rebounding from the pandemic.

Furthermore, the possibility of taxing employer pension contributions is seen as another area of concern. The Resolution Foundation suggests that such measures could raise up to £18 billion by the end of the decade, but this would come at the cost of imposing financial burdens on employers and high earners.

Labour is already under scrutiny for potentially breaking pre-election promises, with the opposition accusing the party of redefining its tax pledges. There is also concern about the broader implications of Labour’s economic approach, including possible tax hikes on capital gains, which some fear will undermine entrepreneurial incentives .