A senior minister has cautioned that any reduction in national insurance would have repercussions for public spending, following a proposal by Wes Streeting to use such a cut as a means to boost employment.
The Labour leadership contender suggested a 'targeted reduction' in employers' national insurance contributions in an interview with the Sunday Times, aiming to 'actively incentivise' hiring, particularly of young people. Labour's first budget had raised these contributions, a move that opponents and some businesses argue has made hiring more difficult.
On Sunday morning, Work and Pensions Secretary Pat McFadden expressed support for the Chancellor's decision, noting that it had generated funds for public services such as the NHS. Speaking to Sky News's Sunday Morning With Trevor Phillips, Mr McFadden pointed out that businesses are already exempt from paying employers' national insurance for workers under 21.
'Now, it's a fair point of debate to say maybe we should expand that or do something with it, but like every other call for a tax change, there's a cost to these things. You have to net these things off,' he said. He added: 'If you want to pull one lever in the tax basket, as it were, there will be consequences.'
The discussion over national insurance unfolds as Labour figures position themselves ahead of an anticipated leadership contest in the coming months. Mr Streeting has already declared his candidacy, asserting he has the necessary backing from MPs to trigger a contest. In his Sunday Times interview, he also advocated for issuing North Sea oil and gas licences to raise tax revenue and pursuing a 'maximalist' relationship with the EU within the confines of Labour's 2024 manifesto.
The other main contender is expected to be Greater Manchester Mayor Andy Burnham, provided he wins the Makerfield by-election on June 18. When asked about the lack of female contenders so far, Mr McFadden insisted there is currently 'no contest' for the leadership, as Sir Keir Starmer remains in office. However, he noted: 'There are wonderful women politicians in the Labour Party, many of whom are capable of leadership, and if we ever are in the position of a contest, why wouldn't they put themselves forward?'
