A Labor raid on employers’ national insurance contributions would put UK jobs and investment at risk, business leaders have warned.

The intervention comes after Trade Secretary Jonathan Reynolds suggested the government could increase the employer levy as part of the October 30 Budget.

He insisted that Labour’s manifesto pledge not to raise taxes applied to employees but would not say the same thing to employers.

Charlie Nunn, chief executive of Lloyds Bank, said National Insurance would be one of the “worst taxes” to increase because it would act as a “handbrake” on investment by making it more expensive to hire staff for businesses.

He told the Telegraph: “We think anything that helps people continue to invest and take appropriate risks is really important. Anything that did the opposite would be a handbrake. »

Kate Nicholls, chief executive of UK Hospitality, added: “This is a tax on jobs. An increase in the number of NICs makes it more difficult to hire staff and take risks in recruitment and expansion, as the costs will be much higher.”

Shadow work and pensions secretary Mel Stride said it would be “absurd” for Labor to argue that increasing employers’ NI was not a breach of their manifesto commitments.

Mr Stride told Sky News’ Sunday Morning With Trevor Phillips that Labor had “boxed itself in” by “saying they were not going to be a party that was going to have to raise taxes”.

He said: “This now leaves you with a narrow tax field. I think if they go for national employers’ insurance, firstly, it’s a very bad tax to raise, because it’s a tax on jobs and what they should be. It is about growth and increasing the productivity of the economy.

“The second thing is I think it goes completely against their agenda which assured us that they would not put in place national insurance.

“So unless they claim that employers’ national insurance is not the same as national insurance, which is nonsense, then they will be failing in their manifesto commitment.”

Mr Stride then called the Government’s claims of a £22 billion black hole in the public finances “fictitious”.

Regarding Labor’s manifesto promise not to increase national insurance, Mr Reynolds said: “That pledge was about taxes on workers, so it was specifically in the manifesto, a reference to employees and tax on income.”

Employers pay National Insurance up to 13.8% on employees’ earnings, but wages paid into a pension are tax-free.

A recent study by the Resolution Foundation think tank found that levying National Insurance on employers’ pension contributions at 13.8% would raise up to £18 billion a year by the end of the decade.