Reeves Defends National Insurance Hike, Says Small Businesses Exempt
Chancellor Rachel Reeves has defended the upcoming National Insurance changes during an interview, specifically addressing concerns about their impact on small businesses. The adjustments, announced in the Autumn Budget but not discussed in the recent Spring Statement, are set to take effect next month.
Speaking on GB News, Reeves clarified her position, stating that the smallest businesses will be exempt from the increase. She provided an example, saying, “If you employ, for example, four people at the National Living Wage, you won’t pay any National Insurance whatsoever.”
The changes involve a rise in Employer National Insurance contributions (ENICs) from 13.8% to 15%. Additionally, the annual salary threshold at which employers begin paying NICs will decrease from £9,100 to £5,000.
Reeves acknowledged potential “consequences” from the tax changes, but argued that the alternative would have left public finances in a “precarious position.” She highlighted the government’s investment in the National Health Service (NHS) as a critical factor.
“I do recognise that any tax change will have consequences but the alternative was to leave the public finances in a precarious position and not put money into the NHS,” Reeves stated.
She also noted positive developments, such as a decrease in NHS waiting lists for five consecutive months, with over two million additional appointments in the first eight and a half months of the Labour Government. Reeves emphasized the government’s commitment to delivering on promises regarding public services without increasing taxes for working people.
Examining the broader economic outlook, Reeves addressed the Spring Statement’s impact. The budget watchdog, the Office for Budget Responsibility, halved its forecast for gross domestic product (GDP) growth in 2025, from two percent to one percent. This adjustment reflects “lack of recent momentum and waning domestic confidence.”
Reeves responded to the forecast by stating, “I am not satisfied with these numbers.” She reiterated the government’s dedication to economic growth, stating, “That is why we on this side of the house are serious about taking the action needed to grow our economy. Backing the builders, not the blockers.”
Rachel Reeves on GB News
