| Hi there, I'm Ailbhe Rea, a Bloomberg UK Associate Editor based in Westminster. With two weeks to go until the Budget, Keir Starmer hasn't ruled out increasing national insurance on employers. That's prompted pushback from business groups, who have warned that raising the payroll tax would hurt economic activity, with a particular impact on the retail and hospitality sectors. The prime minister's response contrasts with an interview with Stephanie Flanders yesterday, where he showed that the government is willing to step in when it believes reporting on Budget decisions is particularly egregious. In that instance, he said that reports of an increase in capital gains tax to 39% were "wide of the mark," hoping to shut down some of the wilder speculation around that tax.  Keir Starmer during a Bloomberg Television interview on the sidelines of the International Investment Summit in London on Oct. 14. Photographer: Hollie Adams/Bloomberg But he and Rachel Reeves have very pointedly not done that around employer national insurance. Instead, they have both left that door firmly open, insisting that such a hike on the employer side of the tax would not be in breach of Labour's manifesto promises not to increase taxes on "working people." Much of the political debate today has involved splitting hairs over that wording. While Labour officials believe they can get away with saying this isn't a betrayal (they're merrily pointing out that the Tories attacked the party during the election campaign for not ruling out a rise in NI for employers), it's harder to dodge concerns from the business community. They say this will disincentivise companies from hiring new staff, and have a knock-on impact on wages.  Rachel Reeves at the Investment Summit yesterday. Photographer: Tolga Akmen/EPA "It would be a really damaging way to raise the money," Neil Carberry, chief executive of the Recruitment and Employment Confederation, told Bloomberg Radio. "National insurance isn't a tax on profits. It's a tax on activity. It falls most heavily on labor-intensive firms. Those tend to be retailers, hospitality, health firms, consumer-facing businesses," he added, describing the proposal as a "real challenge" for high streets. But Reeves has boxed herself in by pledging in the manifesto not to increase income tax, national insurance and value-added tax on "working people" — the Treasury's main revenue-raisers — while seeking to plug a £22bn black hole. In going for something that could raise up to £17bn without technically breaking those promises, the Chancellor will likely feel that, in a situation where all options are difficult, she's found one she can just about live with. Want this in your inbox each weekday? You can sign up here. | 
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