Esther McVey has warned unemployment levels are set to soar as a direct result of government’s “anti-business agenda.”
Ms McVey said businesses were struggling to cope with the “barrage of attacks” from Chancellor Rachel Reeves, including a rise in employer national insurance contributions and a lowering of the threshold it is paid.
Speaking in Treasury Questions Ms McVey said: “I am sure that the Chancellor subscribes to the basic principle that if the cost of something is put up, we will see less of it. That is why Governments have, over many years, put taxes on things like smoking.
“Does she accept that the principle also applies to employing people—that the more expensive the Government make employing people, with their jobs tax increasing NICs for employers, the less we will see of that?”
In response the Chancellor replied: “The Conservative party is a good example of that. The cost of the Conservative party went up, and its number of MPs shrank.”
Ms McVey criticised the Chancellor for failing to answer and said the throw away comment would offer little comfort to struggling businesses or anyone at risk of redundancy.
Ms McVey said: “What the Chancellor is doing is putting jobs at risk and making it extremely difficult for businesses to operate. No one wants to make staff redundant, but many have said they fear they will have no choice as they cannot afford the extra costs.
“Unemployment levels will rise and in turn so will the benefits bill. Labour claims it wants to get more people into work, but by hitting businesses there will be no jobs.
“This is not how to grow an economy; it is the complete opposite. These measures will stifle growth. It is another ill-thought through policy from the Chancellor who is the most anti-business this country has seen in decades. Her policies are seeing businesses now closing at the highest rate since the financial crash in 2010.”
Local businesses have told Ms McVey they are concerned over the NICs rise, increases in minimum wage and a reduction to business rate relief introduced by Rishi Sunak during the pandemic, from 75 per cent to 40 per cent – which doubles the cost for many businesses.
According to the Institute of Fiscal Studies, as of last month, an employee on the minimum wage working full time earning £22,000 will now cost their employer an extra £770 a year in NI alone, and a medium earner of £33,000 would cost an additional £900.
