Reeves's deputy dismisses Bank of England's job market fears
Darren Jones, the chief secretary to the Treasury, insisted that 'hundreds of thousands of new jobs' have been created, despite the Governor of the Bank of England raising concerns that the tax changes were damaging hiring and hitting pay packets.
Mr Jones claimed that National Insurance contributions (NICs), paid by bosses on their employees' pay packets, protect workers rather than harming their wages and their job prospects.
'There have been hundreds of thousands of new jobs created across the economy and we, in the first quarter of the year, were the fastest growing economy in the G7,' Mr Jones said in an interview on BBC Radio 4's Today Programme.
'We are doing everything we can to create the conditions for business to be profitable and to be able to grow, of course we had to take that particular tax decision in the Budget last year because our commitment was to protect working people in their pay slips.'
He was speaking after Mr Bailey warned companies were 'adjusting employment and hours, and also having pay rises that are possibly less than they would have been if the NICs change hadn't happened'.
'I think we're getting more consistently the story that [businesses], if you take the National Insurance change, are adjusting via the labour market. I don't think we're getting to a tipping point in the sense that it's becoming a sort of flood,' he said in an interview with The Times.
Softening labour market
It is not the first time the Governor has raised concerns over the impact of the tax.
Last month, Mr Bailey told the House of Lords: 'We are starting to see softening of the labour market and that's the message I get when I go around the country talking to firms.
'I am hearing more firms telling me they are making adjustments on both of the labour market sides, so both quantities and prices.'
Regular wages in the private sector in April grew by 5.1pc on the year, according to the Office for National Statistics, the slowest pace since February 2022.
Tax data indicates there were 30.2m payrolled employees in May, down by 0.9pc, or 274,000, compared with the same month of 2024.
Even as the number of people employed in health and social work increased by 62,000 on the year, jobs in accommodation and food services plunged by 124,000.
The ONS found 736,000 job vacancies advertised in May, down from the post-lockdown peak of 1.3m two years earlier, and the lowest number since the depths of Covid in 2021.
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