Burnham urged to scrap national insurance hike amid claims it has ‘destroyed jobs’
Businesses are facing costs of more than £1,000 per worker per year due to the Chancellor’s decision to increase employers’ National Insurance, new figures show.
According to analysis by the Scottish Parliament Information Center (SPICe), employers pay an average of £890 a year in extra tax on workers over the real living wage (£26,228).
For those on an average salary of £39,879 in Scotland, this figure rises to £1,053.
The SNP, which commissioned the analysis, has called on Andy Burnham, who is expected to become prime minister later this month, to reverse the employers’ National Insurance increase.
Chancellor Rachel Reeves implemented the rate increase following Labour’s landslide election victory and lowered the starting threshold for the tax in 2024.
SNP MSP Laura Mitchell said: “As a priority, Andy Burnham must repeal Labour’s national insurance tax increase, which is destroying jobs and costing businesses in Scotland huge sums of money.
“This was an incredibly short-sighted Labor policy that created a high-cost, toxic environment for businesses in Scotland and the UK, laying off workers, squeezing wages, reducing investment and hindering economic growth.
“Analysis now shows this policy is costing businesses in Scotland around £1,000 per employee – wondering why employment is rising and fewer vacancies are being created? That’s the cost of Westminster.
“Westminster policies have wiped billions of pounds from the Scottish economy, causing unemployment and the cost of living to soar.
“It is clear that Scotland needs the full powers of independence so we can build a stronger economy and a better future.”
Speaking in March, Ms Reeves acknowledged there was a “valid argument” against employers’ decision to increase national insurance contributions, especially at a time when youth unemployment is nearing one million.
But the Chancellor argued the 2024 policy was necessary to direct funds to vital public services.
Appearing before Parliament’s Treasury Committee, Ms Reeves said: “In my first budget we took the decision to increase national insurance and that was because we needed to properly fund public services, including the NHS, which has received an increase of £29bn a year.
“So I understand, and it’s a valid argument to say it shouldn’t have happened. But if it didn’t happen, we wouldn’t be able to put the money into the NHS and reduce waiting lists.”
“It’s also good for business as waiting lists in the NHS are reduced because it means more people are available for work and the workforce is healthier.
“But I am aware that there are certain problems with youth unemployment.
“We inherited a lot of this, with respect, a huge increase in the number of young people, not in education, employment or training, but we are facing it with actions to be published from next month.”
A spokesman for Mr Burnham said: “Andy is focused on delivering good growth in every postcode, raising living standards and giving families breathing room by tackling rising costs. On tax, he’s sticking to the manifesto.”
