Rachel Reeves will hit millions’ pensions due to NI raid on employers, warns Lord Blunkett

Rachel Reeves was warned about walking National Insurance on employerspension contributions as a result of Lord Blunkett’s abrupt last-minute intervention.

With just days left until the Budget is passed on October 30, a Labor peer has warned that such a move would hit the pension pots of millions of people across the UK.

Labor has ruled out increases in key National Insurance, Income Tax and VAT rates and has sought to ensure that its manifesto promise applies to “working people”.

But it left the door open for some changes to NI, including on employer pension contributions.

Ministers have not denied it is one option being considered as Ms Reeves tries to raise around £40bn through tax rises and public spending cuts.mainly the former, to plug an alleged £22 billion black hole in public finances she says she inherited from the Tories, which they deny, and spend billions more on the new government’s priorities such as the National Health Service.

Lord Blunkett stressed that he had no idea whether such an increase to NI would be included in the Budget.

“But if that is true and next Wednesday there is a proposal to include National Insurance in the pension contributions paid by employers, then what is the logical outcome of that?” he told BBC radio.

“The point is that employers will pay less contributions to the population’s pension fund.”

Speaking earlier on Times Radio, he stressed: “Employers must pay at least 3 per cent into the pension fund.

“Now a lot of people are paying more, which is good too, because 3 percent is not going to solve the problem in terms of what people will inherit in the future.

“So anything you do that prevents employers from putting more money into their employees’ retirement fund is going to be harmful.”

The peer was work and pensions secretary in 2005 when the government adopted a landmark report on automatic enrollment proposed by the Pensions Commission, led by Lord Adair Turner.

“We did this on the basis that there will be a generation different from mine who will have a rotten pension,” Lord Blunkett added.

“In other words, their retirement will be miserable.

“So I think we have an obligation to encourage employers to pay as much as possible into the pension fund.”

He stressed that he was not talking about a wider NI rate for employers.

“This is a completely separate issue,” he explained.

“But you don’t stop people from paying and building a pension.”

He stressed that the government needs to think about both the long and short term as it plans a series of tax rises, many of which could hit London hard.

His comments came as Ms Reeves was confronted The row over whether borrowing billions of dollars by loosening its debt-fueled fiscal rule for transport and other infrastructure projects will push up interest rates and mortgages for millions of households.

The Chancellor warned of “tough choices” in the Budget on taxes, public spending and borrowing, given the state of public finances rocked by the Covid pandemic, Vladimir Putin’s war in Ukraine, Brexit and, to a lesser extent, economic mismanagement under Liz Truss’ brief premiership.

“Rachel Reeves has been dealt a terrible hand,” said Lord Blunkett.

He backed changes to capital gains tax, adding: “There are all sorts of things that have been put in place.

“Rachel’s impossible task is to get the right ones out into the environment so that we get not only a picture of how we are going to fill the gap and how we are going to invest in our services, which are in a desperate state, but also hope. the drive and perhaps also the energy that we need as a nation.

“I have a feeling that after Covid we are a tired nation and there will be no more misfortune.”

He also said the Government needed to find “different phraseology” for the people it was trying to protect from the burden of tax rises, whom ministers had defined as “working people”, as he could not explain, for example, people who had just retired were whether they are included.

“If that balance is wrong, you’ll end up hitting those who have investments, and we need investments,” he said.

“We need people to save money so other people can borrow.”