A senior minister has warned of “consequences” for public spending of any cut to national insurance after Wes Streeting suggested the move as a way to boost employment.
The Labour leadership hopeful suggested a “targeted reduction” of employers’ national insurance contributions in an interview with the Sunday Times as a way to “actively incentivise” hiring, particularly of young people.
Labour’s first budget increased employers’ contributions, which the party’s opponents and some businesses say made it harder to hire more staff.
On Sunday morning, Work and Pensions Secretary Pat McFadden said he backed the Chancellor’s decision, which had raised money for public services such as the NHS.
Mr McFadden told Sky News’s Sunday Morning With Trevor Phillips businesses already did not have to pay employers’ national insurance for workers under the age of 21.
He said: “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 added: “If you want to pull one lever in the tax basket, as it were, there will be consequences.”
The debate over national insurance comes as Labour figures continue to jockey for position ahead of a leadership contest expected to take place in the coming months.
Mr Streeting has already openly declared himself as a contender, saying he has the necessary backing from MPs to launch a contest.
In his Sunday Times interview, he set out a series of other policy positions, including issuing North Sea oil and gas licences as a way to raise more tax revenue and pursuing a “maximalist” relationship with the EU within the limits set out by 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.
Asked about the lack of female contenders for the leadership so far, Mr McFadden insisted there was currently “no contest” for the position, as Sir Keir Starmer remains in office.
But he added: “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?”
