Rachel Reeves lastly concedes there was “valid argument” she should not have hiked job taxes
However the Chancellor insisted her tax raid was needed to pour billions into public services – despite youth unemployment now edging towards one million
Rachel Reeves finally concedes there was a “valid argument” she shouldn’t have hiked job taxes(Image: Jack Taylor, Getty Images)
Chancellor Rachel Reeves has finally conceded there was a “valid argument” she should not have hiked employers’ national insurance.
But she insisted her tax raid was needed to pour billions into public services – despite youth unemployment now edging towards one million.
It sparked a backlash last night as critics said her admission was too little, too late for firms, workers and the jobless across the nation now struggling.
The minister defended the controversial move, announced in 2024, while facing MPs on Parliament’s Treasury Committee.
She said: “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.
“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.”
But John O’Connell, of the TaxPayers’ Alliance said Reeve’s admission would be “little comfort to the businesses now struggling with the consequences of her decision”.
He added: “Taxing jobs was always going to mean fewer jobs, and the sharp rise in youth unemployment shows exactly who ends up paying the price when politicians treat employers like cash machines.
“If the government is serious about getting young people into work, the first step should be reversing the employer’s national insurance hike.”
Data from the Office for National Statistics revealed 957,000 people aged 16 to 24 were classed as “Neets” in the three months to December – up from 946,000 in the previous quarter.
They are unemployed folk not in education, employment or training.
Reeves said the Government is expanding apprenticeships.
She also pointed to her “youth guarantee”, promising paid work for young people who have been out of education or employment for 18 months.
Separate figures from the ONS show Britain’s overall unemployment rate has climbed to 5.2%.
Businesses have warned they are slowing hiring as the cost of employing staff rises.
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