04
Reduce Employer National Insurance to 10%
Make it progressively cheaper to employ people — and give businesses room to invest, grow and hire.
Manifesto 1.0 proposes gradually reducing Employer National Insurance from 15% to 10% over ten years, to reduce the cost attached to employing people, strengthen the incentive to hire, and leave businesses with more capacity to invest in their staff and their future.
Published Manifesto 1.0 policy. The sections below set out the proposal as published. Questions and challenges are open questions, not settled answers.
Key figures
- Employer NI today
- 15%
- Long-term target
- 10%
- Implementation
- Phased over ten years
- Core objective
- Make it cheaper to employ people.
- A policy direction, not a costed and certified plan.
01 · The Idea
Proposal 04 would gradually reduce Employer National Insurance from 15% to 10% over ten years. The reduction is deliberately gradual.
Manifesto 1.0 asks whether, if Britain wants more people in work, government should progressively reduce one of the taxes attached directly to employing them.
The intended economic chain is: lower employment costs → greater capacity and confidence to hire → more employment and investment → more economic activity → a broader tax base. That chain is an economic proposition to be tested, not a guaranteed outcome.
02 · How it works
The rate would step down across ten years along the trajectory set out below, following the reform of employee taxation in Proposals 02 and 03 and addressing the other side of employment: the cost faced by employers when creating and sustaining jobs.
Employer National Insurance is not abolished. It is reduced, in stages, and each later stage would be judged against economic and fiscal evidence.
The fiscal challenge is explicit. A lower Employer NI rate means government would receive less revenue from that tax than it otherwise would, all else being equal. Manifesto 1.0 does not claim that this tax reduction is free.
The wider economic objective is that stronger employment, productivity, investment and economic activity could broaden the tax base and offset part of the initial revenue loss. That outcome is uncertain, and the employment, growth and revenue effects would need to be modelled and measured throughout implementation.
| Stage | Employer NI rate |
|---|---|
| Today | 15% |
| Year 3 | 14% |
| Year 5 | 13% |
| Year 7 | 12% |
| Year 9 | 11% |
| Year 10 | 10% |
Growth dividends cannot be spent before they exist. If economic performance does not respond sufficiently, later stages of the reduction should be reconsidered against the fiscal position.
Additional capacity could be used by a business to
- Employ another person
- Increase somebody's hours
- Raise wages
- Train staff
- Replace equipment
- Refurbish premises
- Build reserves
- Reduce debt
- Invest in expansion
03 · Why it is being proposed
Businesses experience more than the salary cost of employing somebody. They face accumulated pressures including wages, supplies, energy, rent, VAT, Corporation Tax and taxes associated with employment.
Those combined costs can affect whether a business feels able to hire, increase hours, raise wages, train staff, replace equipment or invest in expansion.
Government cannot dictate what businesses will do with additional financial capacity. The proposition is to create more room for businesses to make those decisions themselves.
What this proposal does not say
- Reducing Employer NI has a fiscal cost.
- It is not guaranteed that every business will hire additional workers.
- It is not claimed that every pound of foregone Employer NI will automatically be recovered elsewhere.
- The proposed phasing is a policy direction and would require detailed HM Treasury and HMRC modelling before implementation.
04 · Questions & Challenges
Nothing in Manifesto 1.0 is presented as settled fact. These are open questions the proposal must be able to answer — they are not answered here.
- 01How much revenue would each stage of the Employer NI reduction cost before behavioural or economic effects are considered?
- 02How strongly does Employer NI affect hiring decisions, particularly among small and medium-sized businesses?
- 03Would businesses use lower employment costs primarily to hire, increase wages, invest, reduce prices, strengthen reserves or increase profits?
- 04How much additional employment and economic activity would be required to offset part of the lost Employer NI revenue?
- 05What economic and fiscal tests should determine whether each later stage of the reduction proceeds?
- 06Would the policy affect different sectors, regions and sizes of business differently?
Have Your Say
What is your view on this proposal?
Scrutiny, not endorsement. Disagreement is as useful here as support.
Responses are counted anonymously and the running totals are shown publicly beside each option. One response per device, changeable at any time.
Have an objection, question or better alternative?
Set out your argument. Serious challenges shape later versions of the manifesto.