Chancellor Rachel Reeves conceded it was “valid” to argue her National Insurance increase should not have happened, but defended the policy as essential for NHS funding. Her acknowledgment before the Treasury Committee came as business leaders warned the tax rise is blocking youth hiring, with official figures showing nearly one million young people out of education, employment or training.
Reeves told the committee Wednesday that reducing NHS waiting lists justifies the employer contribution increase. «We did make the decision to increase national insurance in my first budget and that’s because we needed to properly fund public services, including the National Health Service, which got a £29 billion-a-year uplift,» she said.
The Chancellor acknowledged the validity of arguments against the measure. «So, I do recognise, and it’s a valid argument to say that that should not have happened. But if that didn’t happen, we wouldn’t have been able to put the money into the NHS and reduce waiting lists,» Reeves explained.
Business impact
Business groups painted a stark picture of the policy’s consequences. Kate Shoesmith, director of policy at the British Chambers of Commerce, told the Work and Pensions Committee that 13% of member businesses made redundancies directly because of the April National Insurance changes.
One mid-sized professional services firm faced £167,000 in additional wage costs, Shoesmith said. «When they were thinking about training and progression routes, bringing young people into the jobs market, into their businesses, they would have to pause some of those activities.»