Raise employer National Insurance: note

Central fiscal result

-£24.2bn - Net fiscal impact in 2027-28

Low case: -£27.0bn. High case: -£18.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Models raise employer national insurance by 2027-28.
• Baseline is current policy or published departmental plans.
• Central case uses published party or official anchors where available.
• Wider manifesto interactions are excluded unless stated.

Affected population

• Affected units are people, firms, households or providers depending on policy.
• Direct exposure follows the manifesto or government target group.
• Indirect exposure includes suppliers, workers, consumers and taxpayers.
• Weakest counts are widened in the low and high cases.

Gross impact

• Published anchor or scenario central is +£24.2bn in 2027-28.
• Gross costs or receipts are adjusted for behaviour and delivery risk.
• Tax, benefit or procurement offsets are separated in the fiscal build-up.
• The range is deliberately wider where implementation detail is thin.

Fiscal build-up, central case

• Gross tax or receipt yield: -£30.2bn
• Behavioural and avoidance response: +£4.8bn
• Administration and compliance cost: +£0.1bn
• Other tax-base interactions: +£1.1bn

Central net impact: -£24.2bn in 2027-28.

Behaviour and pass-through

• Low case assumes stronger delivery or receipts than central.
• Central case applies moderate behavioural leakage and pass-through.
• High case allows weaker delivery, larger take-up or higher costs.
• Output effects follow incidence, capacity and investment channels.
• Distributional gains do not automatically imply GDP gains.

Phasing

• 2026-27: -£6.0bn. Phased implementation and take-up.
• 2027-28: -£24.2bn. Phased implementation and take-up.
• 2028-29: -£24.2bn. Phased implementation and take-up.
• 2029-30: -£24.2bn. Phased implementation and take-up.

Main source groups

• HM Treasury, "Autumn Budget 2024 policy costings" (2024): Official policy costings show tax and spending impacts, including behavioural assumptions where published; used for implemented Labour tax measures.
• Gruber, "The Incidence of Payroll Taxation" (Journal of Public Economics, 1997): Employer payroll taxes are often shifted partly to workers through wages, but incidence depends on institutions and time; important for employer NIC and labour-cost policies.
• Kotlikoff and Summers, "Tax Incidence" (Handbook of Public Economics, 1987): The legal payer of a tax is not necessarily the person bearing its economic burden; supports incidence discussion across taxes.
• Office for Budget Responsibility, "Economic and fiscal outlook October 2024" (2024): The OBR assessed employer NICs, public investment and Budget-wide output and inflation effects; supports economic-impact and tax-incidence assumptions.
• Labour Party, "Change: Labour Party Manifesto 2024" (2024): Used to define the pledge wording, policy scope and implementation scenario being modelled.