The Labour Government's proposed increase in National Insurance contributions could lead to a £3,000 reduction in workers' incomes. The change could see employer contributions rise from 13.8% to 14.8%. According to Melanie Pizzey, CEO of the Global Payroll Association: “Whilst pay cuts aren't out of the question, a freeze on pay increases is the least [employees] can expect in the short to medium term.” Experts from the Institute of Economic Affairs (IEA) warn that the burden of increased employer taxes often shifts to workers, resulting in lower wages. Tom Clougherty, IEA executive director, stated: “The idea of tax hikes that don't hit ‘working people' is little more than a political fantasy.” Former OBR chief Sir Charlie Bean agreed. The Telegraph cites him as saying: “Real wages will turn out to be lower than they would otherwise be...So at the end of the day, it will be workers who bear the burden.” The tax hike is also expected to hit 700,000 individuals working as contractors and freelancers. Andy Chamberlain, of self-employment body IPSE, said: “It’s difficult to see how this wouldn’t breach Labour’s pledge not to raise taxes for ‘working people’.”
