Chancellor John Healey has publicly contradicted comments made by Treasury minister Emma Reynolds, who suggested that employers should not be considered 'working people.' The exchange aimed to quell controversy surrounding the government's recent Budget, which introduced tax increases for landlords and savers.
Ms. Reynolds had stated on GB News that she did not believe employers were working people, but rather companies, and that there was a distinction between employers and employees. This came as she defended the government's decision to increase income tax on property and savings income by two percentage points, a move that drew criticism for potentially breaching the Labour party's 2024 manifesto promise not to raise taxes on working people.
During questioning in the House of Commons, Mr. Healey asserted that employers are indeed working people. He emphasized that his Budget provides "breathing space" for businesses and individuals, citing measures such as removing business rates for 70,000 high street firms. He added that the Budget protects earned income and dividend income reinvested into businesses.
The controversy reignited debate over Labour's definition of 'working people,' particularly after a previous increase in the employers' rate of national insurance, which ministers argued did not violate the manifesto because it affected employers, not employees. Ms. Reynolds had previously clarified that the manifesto commitment meant no increase in the headline rates of income tax, VAT, or national insurance for employees.
Opposition figures criticized Ms. Reynolds' comments as "patronising" and out of touch, questioning the government's understanding of small business owners and employers. A Treasury spokesperson reiterated the government's commitment to its manifesto tax promises, emphasizing fiscal discipline while not raising income tax, national insurance, VAT, or corporation tax rates.