By GB News (World News) | Created at 2025-03-04 10:46:10 | Updated at 2025-03-04 14:30:57
3 hours ago
Taxpayers will be forced to foot the £24.billion public sector wage bill over the next five years following Rachel Reeves's National Insurance raid, new analysis shows.
The Chancellor will raise employer National Insurance contributions from 13.8 per cent to 15 per cent next month, whilst also lowering the payment threshold.
While private businesses must absorb these costs from their profits, the increased labour expenses for the NHS, military and other Government bodies will ultimately be funded by taxpayers.
The policy has sparked fury from business leaders who face difficult choices about staffing and prices.
Government forecasts reveal the National Insurance hike will cost taxpayers £24.2bn between April 2025 and 2030
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This protection for Government bodies has drawn criticism from business leaders who must find ways to cover their own increased costs.
Research from the British Chambers of Commerce found 82 per cent of firms would be impacted by the changes. M&S chief executive Stuart Machin has accused Labour of treating retailers "like a piggy bank". Almost 60 per cent of firms said they would be rethinking their recruitment plans due to the tax increase.
Alex Veitch, director of policy at the British Chambers of Commerce, said: "That's unlikely to create an environment that fosters growth - the key priority for the Government. Ministers need to read the room and recognise the impact this tax hike will have."
The legislation is currently being considered by the House of Lords. Shadow Chancellor Mel Stride said: "Labour's reckless jobs tax and anti-business Budget has put a £25billion burden on employers.
"The Labour chancellor was warned that her damaging tax on business would end up raising only a fraction of that for the Treasury.
"Not only is it forcing businesses to shed staff and raise their prices, but Labour are also having to spend billions to shield the public sector from the worst of the damage."
He added: "With inflation up and growth forecasts down, I am afraid that things may yet get even worse for working people."
John O'Connell, chief executive of the TaxPayers' Alliance, said: "The growth crushing part of the economy is being protected while the growth generating part of the economy is being told to cough up more."
He pointed out that public sector productivity has failed to recover from the pandemic while the private sector has been working to stimulate economic growth.
"If ministers want to boost the economy, they should reverse their economics policy and demand more from the public sector while easing the burdens on the private sector."
Industries with small profit margins and high labour costs will be hardest hit by the National Insurance changes. Care homes face a £900million hit according to Nuffield Trust research.
A cross-party group of more than 50 MPs has warned the Chancellor that the changes could wipe out care homes and hospices.
In February, Liberal Democrat peer Baroness Barker successfully proposed an amendment to exempt certain healthcare and charity workers from the increased levy.
Baroness Barker told the House of Lords: "The Government has come forward with some of their public sector exemptions because they realise the effect that this is likely to have."
Mike Warburton, a tax specialist, warned: "We now have the disastrous situation where, despite the vital service they provide, care homes and hospices are having to cut staff due to the additional cost, meanwhile, public sector employment is wholly protected."
