The business secretary has suggested that the government could include employers' national insurance in the budget without breaking campaign promises.
Jonathan Reynolds said Sunday Morning with Trevor Phillips that Labour's promise not to increase National Insurance “was a specific reference to workers in the manifesto”.
National Insurance is paid for by both employees and employers and it is unclear whether Labour's no-tax pledge covered both.
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On Wednesday, in a question from Prime Minister Sir Keir Starmer did not rule out a tax increase.
The Business Secretary's comments are the clearest indication yet that such a rise is being considered.
However, the suggestion comes on the eve of a major investment summit and could spark conflict with companies that would be hit by such a tax increase and could raise questions about the government's commitment to economic growth.
This is also hot on the heels quarrel with DP World following comments from the Transport Secretary that prompted the company to review a £1 billion investment in the Port of London.
“You know the declaration was about taxes on working people… a lot of that is already in the manifesto, but we have to wait for the details of the budget… it will be a budget for growth,” Reynolds said.
Shadow work and pensions secretary Mel Stride said increasing employer national insurance would amount to a “tax on jobs” and “it should be about growth and increasing productivity”.
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With the Budget due in just over two weeks, the Chancellor has also made it clear she plans to change the rules governing how much the government can borrow to spend on infrastructure investment.
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Writing for The Sunday Times, Rachel Reeves said that “it is time for the Treasury to move from simply counting the costs of investment to also recognizing the benefits.”
It has been reported that the Treasury is considering changing the way it calculates debt by excluding the value of assets it owns, such as transport or construction infrastructure, or a student loan book.
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This would reduce the principal amount of public debt and enable the Chancellor to borrow more money under her fiscal rule so that debt falls over the five-year forecast.
Crucially, such a move would not affect day-to-day spending, so tax increases will likely still be needed to plug the gap in current liabilities.
But it would free up space for the treasury to take on more debt, which it could spend on one-off projects such as green technologies, schools and hospitals that ministers say are essential to ensuring economic growth.
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Proponents of such a change argue that the current approach does not adequately take into account the potential long-term economic benefits of borrowing for investment due to the five-year horizon within which debt must begin to decline.
Critics say changing fiscal rules in this way would amount to manipulating data in order to burden the country with obligations.
