The Chancellor has been accused of covering up the impact of her National Insurance raid on workers.
While all tax policy changes are accompanied by an impact assessment known as a Tax Information and Impact Note (TIIN), the Government did not publish one alongside the £25 billion National Insurance raid on employers announced in the Budget, it has emerged.
TIINs assess the probable impact of a policy change on the economy, families, individuals and those who have protected characteristics under the Equality Act.
Before the general election, Labour repeatedly pledged not to increase taxes on “working people”, including in its manifesto.
The Chancellor said the Budget met Labour’s pledge because the NI increases fell on employers, not on employee payslips.
However, the independent Office for Budget Responsibility’s forecast accompanying the Budget said 80 per cent of the NI rise would be passed on to workers through lower wage increases, while the other 20 per cent would be felt through higher prices.
Last week, the Institute for Fiscal Studies think tank warned that the policy would disproportionately impact women in the workforce because they are over-represented among the lowest earners likely to be most affected by the change.
Mel Stride, the shadow chancellor, said: “It is unacceptable that Labour are withholding this critical analysis of the impact of yet another of their pernicious policies.”
An impact assessment of the policy is expected to be published in the coming months when legislation to implement the National Insurance change is drafted.
Government sources claimed the long delay between the policy being announced and the impact assessment being published is a result of the changes not coming into effect until spring 2025.
It comes after the Government was accused of “breaking rules” by not publishing its equality impact assessment of the 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 Chancellor’s cuts to the allowance.
The Conservatives described the debacle as “appalling” and suggested Ms Reeves may have broken the ministerial code.
In the Budget, the Chancellor announced a raid on employer National Insurance contributions projected to raise £25 billion for the Exchequer.
Ms Reeves raised the rate of employer NI from 13.8 per cent to 15 per cent while also lowering the threshold at which employers started to pay it. The salary threshold dropped from £9,100 a year to £5,000 a year.
In a further tax-raising measure, the Chancellor increased the employment allowance, which helps firms reduce their NI liability, from £5,000 to £10,500.
Business leaders from some of Britain’s biggest hospitality groups are writing to the Chancellor this weekend warning of closures and job losses as a result of her NI changes.
An early draft of the letter seen by Sky News reads: “The changes to the NICs threshold are not just unsustainable for our businesses but inevitably regressive in their impact on lower earners… Unquestionably they will lead to business closures and job losses within a year.”
The letter has reportedly been circulated among execs from Stonegate Group, Britain’s biggest pubs operator along with other major hospitality companies.
“The Chancellor is sending a clear message to pensioners, farmers and small business owners that she does not know, or care, about the damaging impact her policies will have,” said Mr Stride.
“To govern is to choose and Labour must come clean about the true impacts of the choices they are making.”
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