National Insurance Debate
Andy Burnham Urged to Halt National Insurance Rise as Businesses Face Higher Worker Costs
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Employers in Scotland are paying more than £1,000 extra per worker each year because of Chancellor Rachel Reeves' decision to raise employers' National Insurance, according to analysis by the Scottish Parliament Information Centre (SPICe), as reported by The Independent. The SNP is now calling on Andy Burnham — tipped to become prime minister later this month — to reverse the hike, claiming it has "destroyed jobs."
SPICe found that businesses pay an average of £890 more in tax per year for workers earning the real living wage of £26,228. For those on the Scottish median salary of £39,879, that figure climbs to £1,053 annually, according to ITV News.
What the National Insurance Rise Actually Costs Employers
Chancellor Reeves raised employers' National Insurance contributions in her autumn budget. The change means firms pay more tax on every worker they employ. The higher the salary, the higher the extra bill. SPICe broke down the numbers clearly: £890 extra per year for minimum-wage workers, and £1,053 for median-wage workers, according to Herald Scotland.
Critics say the costs are not just numbers on a spreadsheet. The SNP argues the rise has directly led to job losses across Scotland and the UK. Youth unemployment is approaching one million, a figure even Reeves has acknowledged as a concern, according to The Independent.
SNP Targets Burnham Before He Reaches Downing Street
The SNP is using Burnham's leadership campaign as an opening to demand policy change. Burnham, the current Greater Manchester mayor, is widely expected to take over as Labour leader and prime minister before the end of the month. The SNP wants him to commit to scrapping the NI rise before he gets the keys to No. 10, according to The Independent.
Burnham, for his part, has promised "growth in every postcode" as part of his pitch to voters and businesses. He has not yet made a firm commitment on National Insurance, but the pressure is growing from multiple directions, according to Herald Scotland.
Reeves Admits There Is a Valid Case Against Her Own Policy
In a rare moment of candour, Reeves acknowledged there is "a valid argument" against raising employers' National Insurance. She made the admission as data showed youth unemployment closing in on one million, according to ITV News. That figure has added weight to claims that the tax rise is hurting hiring.
Business groups have long warned that higher employer costs lead directly to fewer jobs, lower hours, or both. The SPICe numbers give those warnings a concrete price tag — over £1,000 per worker per year — making it harder for the government to dismiss the criticism, according to ITV News.
What Happens Next and Why Scotland Feels It Hardest
Scotland's economy is particularly exposed. The SPICe analysis was commissioned specifically to show how the rise hits Scottish businesses, where median wages and employment patterns differ from the UK average. At £39,879, the Scottish median salary puts most full-time workers squarely in the £1,053-a-year extra cost bracket, according to Whitehaven News.
The SNP's push puts Burnham in an awkward spot. If he keeps the NI rise, he risks being seen as continuing a policy his own chancellor admits has flaws. If he scraps it, he must find another way to fill a significant gap in public finances. Either way, a decision is likely coming soon, according to The Independent.
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