Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether her Department has produced modelling on the potential behavioural impact of increases to employers’ National Insurance.

A Tax Information and Impact Note (TIIN) was published alongside the introduction of the Bill containing the changes to employer NICs. The TIIN sets out the impact of the policy on the exchequer, the economic impacts of the policy, and the impacts on individuals, businesses, and civil society organisations, as well as an overview of the equality impacts.

In their October 2024 Economic and Fiscal Outlook, the Office for Budget Responsibility (OBR) estimated the increase in employer NICs will reduce the level of potential output by 0.1% at the forecast horizon, by reducing labour supply by around 50,000 average hours equivalent.

Overall, once the impact of all Budget measures are taken into consideration, the OBR expect the employment level to increase from 33.1 million in 2024 to 34.3 million in 2029.

The Economic and Fiscal Outlook also sets out the costing for the employer NICs increase, including behavioural impacts, in table 3.2.

https://obr.uk/docs/dlm_uploads/OBR_Economic_and_fiscal_outlook_Oct_2024.pdf