Increasing employers’ National Insurance by 2 per cent would cost three times the money raised by scrapping the winter fuel allowance

Rachel Reeves’ plan to increase National Insurance (NI) contributions for employers will cost the taxpayer an extra £3.6 billion a year, the Conservatives have said.

The Government would be forced to find the money given that the public sector as well as the private pays the contributions.

At present, the NI bill for public sector employers is about £26 billion a year at the current employers rate of 13.8 per cent.

Andrew RT Davies, the leader of the Welsh Conservatives, said it would cost the taxpayer an additional £3.6 billion annually if the Chancellor were to put up the rate by 2 per cent.

Mr Davies pointed out that this was three times the amount of money raised by scrapping the winter fuel allowance for all but the poorest.

Taxpayers foot the bill

He said: “Higher employer national insurance will make each new recruit more expensive and increase costs to business. Rachel Reeves said so herself in 2021, when she called such a rise a ‘jobs tax’. I miss the old Rachel Reeves.

“An employer National Insurance rise doesn’t just send the wrong message to business. It also comes with a cost to taxpayers, who have to foot the bill for the rise for public sector workers.

“Analysis by the Welsh Conservative Senedd Group has shown that a 2 per cent rise of employer National Insurance would cost Welsh taxpayers nearly £200 million,” he added.

“The total cost to UK taxpayers of paying for a public sector employer National Insurance rise of 2 per cent would be £3.6 billion.

“That sum could pay for the Conservatives’ planned social care reforms axed by Rachel Reeves, or plug the hole in pensioners pockets created by Labour’s scrapping of winter fuel payments for most pensioners nearly three times over.

“To really put this into perspective, the sum is sufficient to enlist enough recruits to triple the number of personnel in the British Army.”