Is Reeves right that employers' NI isn't a tax on working people?

The Chancellor of the Exchequer has just told my colleague Joel that if - as expected - she increases what employers pay to the government in national insurance that would be consistent with the Labour Party's manifesto promise not to "increase national insurance".Rachel Reeves's argument is that the party meant only the national insurance paid directly by employees, not the national insurance that employers are obliged to pay on behalf of their staff.She implies that we should all have been prepared for a possible rise in employers' NI because the manifesto qualifies its pledge not to increase this tax on income with the caveat that a Labour government "would not increase taxes on working people".

In other words, Reeves is insisting that we should all have known that increasing employers' contributions could be on its way under a Labour government because - on her definition - employers' NI is not a tax on working people.She seems to believe that a rise in employers' NI would hurt only the owners of the business.Reeves ignores that many employers would attempt to recoup this increased employment cost by limiting pay rises.Alternatively if Reeves' goes her seemingly preferred route of levying NI on the pension contributions made by employers for their employees, employers are bound to respond by freezing those pension contributions, or cutting them where they are above the statutory minimum.Any such response would hurt working people. It would have a clear and harmful impact on their future pensions, their income in retirement.In economic terms, putting up employers' NI is unambiguously the quacking duck of an attack on working people.

It only quacks slightly less loudly in politics if most voters expect all politicians to play fast and loose with the common sense meaning of manifesto commitments.Reeves and Starmer desperately need the many billions of pounds that would be raised from this NI rise to help fix public services.

But if on October 30 they announce it, as I expect, they won't achieve their aim of restoring trust in what ministers say.

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