The bleak outlook from Rachel Reeves’ budget came into clear focus once again this week as it was revealed that half of British businesses expect to cut jobs, raise prices or both. The main culprit behind these decisions? You guessed it, the increases to employers' national insurance contributions.Â
If that wasn’t enough to give the chancellor pause for thought, perhaps the latest TPA analysis will. In a new briefing paper, our research team revealed that this jobs tax represents the single largest tax increase in decades.Â
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While ministers claim it’ll raise ÂŁ23.8 billion in 2025-26, the net gain for the government coffers is likely to be more than ÂŁ10 billion less than predicted when lower employment, wages, and profits are taken into account. The additional costs to employers of the national insurance raid are dramatic, with even part time workers on the minimum wage now set to cost an extra ÂŁ649 or 5.3 per cent.Â
In an op-ed for ConservativeHome, Darwin Friend, our head of research, asks why taxes are able to run so rampantly out of control here compared to other countries. Darwin rightly highlights the invisibility of some tax rises and argues for a new “Total cost to employer” to be added to all payslips: “This would then be broken down into gross salary, income tax, employee NICs, employer NICs and any other further charges, such as student loans or pension contributions, yielding a final net pay. This would clearly demonstrate to the worker the total amount that their employer is willing to pay them at least in principal, while demonstrating how much actually ends up in the pocket of the employee.”
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This might sound like a minor change, but increasing peoples’ awareness of different taxes and how they are affected by them, particularly indirectly, is key to helping get the tax burden under control.Â
As Keir Starmer embarked on yet another relaunch, perhaps instead of continuing his government by platitude, he should take another look at the devastating decisions made in the budget and really deliver the growth that our country deserves.
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For this week’s episode of a nation of taxpayers, podcast host, Duncan Barkes, and the TPA’s head of campaigns, Elliot Keck, were delighted to be joined by Dr Ted Bromund, former senior research fellow at the Heritage Foundation.
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With Dr Bromund bringing his perspective from across the pond, they talk about what the UK / US relationship should look like, Elon Musk, and the MPs wanting a 3 day week.
You can listen to the latest episode on Apple Podcasts, Spotify, and now also on YouTube.
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TaxPayers' Alliance in the news
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Kicked into the long grass
There’s nothing wrong with taking your time to make important decisions, but the current government is taking this approach to a whole new level. Since taking office, ministers have set up no fewer than 67 reviews, consultations, and taskforces - and of course, you’re picking up the tab.
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Speaking to the Daily Mail, John O’Connell, our chief executive, took aim at the procrastination over policy approach gripping Whitehall: “The Prime Minister promised change during the election, but this simply proves that it is business as usual in Whitehall, where talk trumps action. Instead of providing busy work for bureaucrats, the Government should concentrate on the priorities of the British people.” Hear, hear!
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Budget Scotland
On Wednesday, the SNP’s Shona Robison delivered the latest budget north of the border. Amongst a host of new spending plans, there was a glimmer of hope for taxpayers with some, though by no means all, of the income tax thresholds being unfrozen.
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Darwin summed up this mixed bag when he spoke to the Scottish Daily Express: “With this budget including a dazzling array of spending pledges, there will rightly be concern about the impact of the fiscal measures on the already fragile public finances. Scottish ministers need to ensure that this spending binge is accompanied with meaningful reform of public services.”
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Teacher bursary abuses
Bursaries for people training for certain positions are nothing new but it looks like a scheme for teachers is seeing taxpayers’ generosity being regularly abused. Some of the tax-free payouts have been used for house deposits while others were claimed by people who swiftly left to work overseas.
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Joanna Marchong, our investigations campaign manager, was furious when she heard the news, telling Daily Telegraph readers: “Regardless of whether teacher training grants are well-intentioned, it’s increasingly clear that they are terribly designed. Ministers should look at all possible measures to restore trust in the system, including strict sanctions for those that abuse the generosity of taxpayers.”
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How much of our money does the government waste overall?
Our former chairman, Mike Denham, returns to the TPA blog this week with some in depth analysis of a key question, just how much does the government waste?
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Mike dives into the details and looks at why the dramatic increase in public spending since the turn of the millennium has failed to generate a proportionate improvement to services: “Government operations are never subject to the same kind of competitive pressures that promote efficiency in the private sector. And because the government funds itself by imposing taxes rather than selling services to willing buyers, its activities are at best only loosely and indirectly linked to what its customers actually value.”Â
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Benjamin Elks
Grassroots Development Manager
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