Increasing employer national insurance contributions in the Budget would be an “absolute disaster” for Britain economically, Jeremy Hunt has warned.
“I’m really worried that Labour is going to trash an economy, which has better growth prospects than it has for many years,” the shadow Chancellor told the Financial Times in an interview.
On the prospect of increasing employer NI contributions, he said: “From a government point of view this is a politically painless tax rise, but from an economic point of view it’s an absolute disaster.”
Reeves, he told the paper, should think “very carefully” about measures, such as hiking NI and taxing private equity, which he said would dampen growth and investment.
The former cabinet minister, who narrowly held on to his seat at the July election, suggested that the UK was on the road to recovery following the impact of the Covid-19 pandemic and the energy price shock on the economy.
Treasury officials, he said, had suggested the policy of a NI increase on employers in 2022, following the fallout from ex-PM Liz Truss’ mini-Budget.
But he said: “I rejected it because of the damage it would do to business investment and job creation.”
However, the former Tory leadership candidate – who ruled himself out of the race to replace Rishi Sunak back in July and is not backing a candidate – admitted: “In some ways I share Rachel Reeves’s prescription that the answer is more productivity and more investment.
“But you don’t get there by introducing French labour laws and German levels of taxation.”
Defending his own record, Hunt added: “It’s one of the oldest tricks in the book to try to blame your predecessor for difficult decisions you have to take.
“It’s an even older one to cover up what you’re planning to do before an election to get elected.”
The UK’s first female Chancellor, he argued, could even risk “spooking the markets” after saying prior to the election that she “wouldn’t fiddle the fiscal rules”.
But he praised her promise to “build on our Mansion House reforms and that’s an excellent thing”, while describing planning reforms to speed up building power stations, roads and railways as “positive and something we could support”.
Labour and the Treasury have been contacted for comment.