Rachel Reeves, the Chancellor, has been reprimanded by the equalities watchdog for giving an insufficient assessment of the impact her National Insurance raid will have on workers.
The impact assessment, carried out by HMRC on behalf of the Treasury, was originally withheld after the delivery of the Budget before being released last week.
In a letter to the Treasury and HMRC, the Equality and Human Rights Commission said the assessment âdoes not demonstrate how HMRC is considering the potential equality impact of the policy and is not by itself likely to be sufficient to meet the requirements of the Public Sector Equality Dutyâ.
The impact assessment said the raid would have no equality impact because it falls on businesses, not individuals. But the independent Office for Budget Responsibility has warned that 80 per cent of the impact of the raid will fall on workers through depressed wages.
The Institute for Fiscal Studies has warned that this impact will be disproportionately faced by female workers because they are over-represented among the low paid.
All other major Budget measures were accompanied by an impact assessment, called a Tax Information and Impact Note (TIIN), on the day of the Budget.
Government sources claimed the National Insurance assessment would be published next year when the full legislation was drafted. But after The Telegraph reported that the assessment was being withheld, it was quickly released.
TIINs assess the probable impact of a policy change on the economy, families, individuals and those who have protected characteristics under the Equality Act.
The Governmentâs National Insurance assessment said: âSecondary Class 1 NICs are levied on employers rather than individuals. There are therefore no direct equalities impacts. It is not possible to assess if there will be differential impacts to groups sharing protected characteristics,â it said.
The EHRC wrote in response: âAs the regulator of the Public Sector Equality Duty, it is important that we remind public bodies, including government departments, of their legal obligation to think through the likely equality impacts of the decisions they make.â
The letter, signed by Baroness Falkner, who chairs the EHRC, stressed the importance of a full impact assessment in case the policy change is later challenged.
It comes after the Government was accused of âbreaking rulesâ by not publishing its equality impact assessment of winter fuel allowance changes.
The Government was forced to release the document after a Freedom of Information request. It showed that according to its own forecasts, seven in 10 disabled pensioners stood to lose out on winter fuel payments because of the Chancellorâs cuts to the allowance.
The Conservatives described the incident as âappallingâ and suggested Ms Reeves may have broken the ministerial code.
Gareth Davies, the shadow financial secretary to the Treasury, said: âWe have been sounding the alarm over the damaging impacts of Labourâs National Insurance jobs tax, and now the equalities watchdog is doing just the same.
âThis broken promise not to tax working people will harm small businesses, depress wages and drive up prices for consumers â impacts it seems the Government has failed to even consider with their substandard assessment, like many other of their policies. Labour must now urgently come clean about the true impacts this tax will have.â
The Treasury was contacted for comment.
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