Labour Chancellor Rachel Reeves has admitted that her Big-State Budget will likely have a negative impact on employees’ take-home pay.
Reeves, on Wednesday, announced a litany of tax-raising measures to pay for large-scale public investments, including a 1.2 percentage-point increase to employers’ National Insurance Contributions (NICs).
While this means employees will not see a direct tax hit on their paychecks, it’s the indirect implications that analysts and commentators are most concerned about.
When pressed by the BBC to comment on the consequences of Reeves’ £40 billion tax grab, Reeves said: "It will mean that businesses will have to absorb some of this through profits and it is likely to mean that wage increases might be slightly less than they otherwise would have been.
"But, overall, the Office of Budget Responsibility forecast that household incomes will increase during this Parliament.
"That is a world away from the last Parliament, which was the worst Parliament ever for living standards."
Employers were also hit with a 6.7% minimum wage increase and a reduction in the business rates relief from 75% to 40%. This will have an overt impact on the hospitality and retail sectors, industry leaders have warned.
"I decided the right thing to do was to ask businesses and the wealthiest in our country to pay a bit more," Reeves told the BBC.