Jobs in London pubs, restaurants and hotels will be put at risk from a hike in National Insurance for employers, hospitality chiefs are warning.
They spoke out as Sir Keir Starmer and Chancellor Rachel Reeves refused to rule out such an increase in the October 30 Budget despite claims it would breach Labour’s election manifesto.
The warning came as official figures showed the jobless rate in the capital jumping to the second highest in the country.
Amid worries in the West End and other parts of London about looming tax rises, Kate Nicholls, Chief Executive of UKHospitality, told the Standard: “Hospitality in London employs more than 600,000 people and the rumoured increase to employer National Insurance Contributions would be a damaging tax on jobs.
“The capital’s hospitality sector has the potential to lead the way in creating jobs and helping people out of economic inactivity and into work.
“The Government should focus on progressing this ambition at the Budget, rather than risking jobs through higher taxes.”
Official figures on Tuesday showed the number of people out of work in London has risen to its highest level in almost three years.
The unemployment rate stood at 5.5 per cent in the June to August quarter, up from 5.3 per cent in the previous quarter, according to figures from the Office for National Statistics, with only the North East having a higher rate.
In an interview with the BBC, Sir Keir Starmer warned of a “tough” Budget to fix the dire public finances amid growing speculation over which taxes the Chancellor might raise, with possible changes to NI, inheritance tax and capital gains tax.
Labour’s manifesto included a promise not to raise taxes on “working people”, specifying income tax, VAT and national insurance.
It states: “We will ensure taxes on working people are kept as low as possible. Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”
The Government is denying a hike in NI for employers would breach the manifesto, but this is disputed by the Tories and some experts.
On Tuesday, Sir Keir declined to rule out raising employers’ contributions, saying Labour had been “very clear in the manifesto that we wouldn’t be increasing tax on working people”.
He added: “It wasn’t just the manifesto, we said it repeatedly in the campaign and we intend to keep the promises that we made in our manifesto.”
But shadow Treasury minister Laura Trott said: “In 2021, the Chancellor said increasing employer national insurance was a tax on ‘workers’. That’s why even in her own words it breaks Labour’s manifesto promise not to increase tax on working people.”
The Prime Minister said on Monday that suggestions that capital gains tax could increase to 39 per cent were “wide of the mark”.
Treasury minister James Murray was even clearer on Tuesday that capital gains tax would not rise to 39 per cent but did not rule out an increase.
