Business

CBI urges UK government to reassess Labour’s tax pledge amid rising business burden

Thursday, 6 November 2025 5:07AM UTC

The Confederation of British Industry has called on Chancellor Rachel Reeves to reconsider her commitment to Labour’s tax promises, warning that further increases could harm economic growth and investment.

The Confederation of British Industry (CBI) has urged Chancellor Rachel Reeves to reconsider her adherence to Labour’s manifesto tax commitments ahead of the November 26 Budget, warning that further tax hikes on businesses risk undermining economic growth. The CBI chief executive, Rain Newton-Smith, stressed that growing economic challenges mean sticking rigidly to pledges such as not increasing income tax or National Insurance contributions on employees may no longer be viable. Instead, the Chancellor should consider breaking manifesto promises by spreading the fiscal burden more broadly, including revisiting personal taxes and public spending, to support investment and long-term productivity.

The business group highlighted that firms are already shouldering a historically high tax burden—taxes on businesses now amount to 30.5% of their revenues, the highest rate in 25 years and expected to rise further. This translates to businesses paying approximately £308.6 billion, exceeding combined budgets for the NHS, education, and defence. The CBI cautioned repeatedly that the Government cannot rely on raising business taxes again to close fiscal gaps without risking stalling investment and growth. Instead, the Chancellor must prioritise fairness and strategic measures that stimulate economic renewal rather than imposing short-term austerity steps that could trigger long-term decline.

This position comes amid signals from Reeves herself, who has not ruled out raising employer National Insurance contributions again, despite Labour’s manifesto promise not to increase taxes on working people such as income tax, employee National Insurance, or VAT. Reeves has clarified that this pledge does not extend to employers, and with a sizeable £22 billion deficit in public finances to address, she has advocated for stability measures to attract investment and foster growth—even if that means unpopular tax increases. Last year’s Budget already introduced the largest tax increase since 1993, and further measures could add up to around £26 billion in additional revenues.

Labour’s official stance remains to maintain tax levels on employees, including freezing corporation tax at 25% throughout the Parliament and extending the Energy and Profits Levy on oil and gas producers to fund domestic energy investments. At the same time, the 2024 Autumn Budget introduced a 1.2 percentage point rise in employer National Insurance contributions and raised capital gains tax rates, alongside other measures like a fuel duty freeze and increasing the national minimum wage. To support smaller businesses amid these changes, the Government increased the Employment Allowance, ensuring many small firms pay no National Insurance contributions.

Expert voices, including the Institute for Fiscal Studies, have warned that any additional hike in employer National Insurance could breach Labour’s manifesto promises despite distinctions drawn by Reeves between employer and employee taxes. The IFS director, Paul Johnson, cautioned that raising such taxes would likely reduce real incomes through higher inflation and suppressed wages. Meanwhile, the CBI has also recommended complementary measures to stimulate growth, such as further planning reforms to expedite infrastructure projects, reducing energy costs for businesses, and reconsidering employment legislation that might hamper job creation in an already cooling labour market.

Overall, the backdrop to Reeves' upcoming Budget is one of difficult trade-offs between political commitments and economic necessities. The CBI emphasises the importance of creating "real fiscal headroom" to enable sustained growth and improving living standards, urging that short-term fiscal tinkering could trigger a damaging downward economic spiral. Reeves faces the challenge of balancing these pressures while maintaining political credibility and delivering the investment mission she has described as central to Labour’s economic vision.

📌 Reference Map:

^[1] (The Independent) - Paragraphs 1, 2, 3, 6, 7
^[2] (Reuters) - Paragraphs 1, 2
^[3] (Reuters) - Paragraph 3
^[4] (Labour Party) - Paragraph 4
^[5] (The National News) - Paragraph 5
^[6] (Public Affairs Networking) - Paragraph 5
^[7] (The Independent) - Paragraph 6

Source: Noah Wire Services

More on this

https://www.independent.co.uk/news/business/rachel-reeves-budget-confederation-of-british-industry-chancellor-government-b2859560.html - Please view link - unable to able to access data
https://www.reuters.com/world/uk/uks-reeves-should-break-tax-promises-not-target-business-cbi-head-says-2025-09-09/ - Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), urged UK Finance Minister Rachel Reeves to reconsider her pre-election tax promises and avoid further taxing businesses in the upcoming November 2026 budget. Newton-Smith argued that increasing taxes on businesses would undermine the government's goal of boosting economic growth and go against commitments made after last year's budget, which saw the largest tax hike since 1993. She suggested that Reeves should look elsewhere for revenue, embracing long-term strategic tax reforms rather than adhering strictly to manifesto promises on tax. ([reuters.com](https://www.reuters.com/world/uk/uks-reeves-should-break-tax-promises-not-target-business-cbi-head-says-2025-09-09/?utm_source=openai))
https://www.reuters.com/world/uk/uks-reeves-does-not-rule-out-national-insurance-rise-businesses-2024-10-14/ - UK Finance Minister Rachel Reeves did not rule out increasing National Insurance contributions for businesses. While Labour had promised not to raise taxes on working people, Reeves indicated that this pledge applied to employees, not employers. Facing a £22 billion deficit in public finances, Reeves emphasized the need for stability to attract investment and accelerate economic growth, suggesting that tax increases might be necessary to balance the books. ([reuters.com](https://www.reuters.com/world/uk/uks-reeves-does-not-rule-out-national-insurance-rise-businesses-2024-10-14/?utm_source=openai))
https://labour.org.uk/updates/press-releases/rachel-reeves-speech-at-labour-party-conference-2024/ - In her speech at the 2024 Labour Party Conference, Chancellor Rachel Reeves outlined a budget with real ambition to rebuild Britain. She committed to keeping Labour's manifesto promises, including not increasing taxes on working people, such as income tax, National Insurance, or VAT. Reeves also pledged to cap corporation tax at its current level for the duration of the Parliament and to extend the Energy and Profits Levy on oil and gas producers to invest in homegrown energy. ([labour.org.uk](https://labour.org.uk/updates/press-releases/rachel-reeves-speech-at-labour-party-conference-2024/?utm_source=openai))
https://www.thenationalnews.com/news/uk/2024/10/30/budget-rachel-reeves-tax/ - In the 2024 Autumn Budget, Chancellor Rachel Reeves unveiled an investment mission while raising the tax burden. Key measures included a 1.2 percentage point increase in employer National Insurance contributions, freezing fuel duty for another year, and raising capital gains tax rates. The national minimum wage was set to rise to £12.21 an hour for over-21s in April, and non-dom status was to be scrapped from April, replaced by a residence-based scheme. ([thenationalnews.com](https://www.thenationalnews.com/news/uk/2024/10/30/budget-rachel-reeves-tax/?utm_source=openai))
https://www.publicaffairsnetworking.com/news/rachel-reeves-first-budget - Chancellor Rachel Reeves' first budget was a significant tax-raising measure, with the overall tax take forecast to rise from 36% of GDP in 2023-24 to 38.3% in 2027-28. Personal taxation remained unchanged, meeting Labour's manifesto commitment, while corporation tax remained frozen at 25%. Employers' National Insurance contributions increased to 15% from April 2025, with the per employee threshold reduced from £9,100 to £5,000. To support SMEs, the Employment Allowance increased from £5,000 to £10,500, and the £100,000 threshold was removed, meaning 865,000 small businesses would pay no NICs at all. ([publicaffairsnetworking.com](https://www.publicaffairsnetworking.com/news/rachel-reeves-first-budget?utm_source=openai))
https://www.independent.co.uk/news/uk/politics/rachel-reeves-budget-national-insurance-ifs-b2628848.html - Rachel Reeves was warned that increasing employer National Insurance contributions would be a 'straightforward breach' of the Labour manifesto. Paul Johnson, director of the Institute for Fiscal Studies (IFS), stated that the manifesto clearly promised not to raise National Insurance rates. Reeves had previously indicated that the pledge applied to employees, not employers, but the IFS cautioned that raising employer National Insurance would likely lead to lower real incomes due to higher inflation and lower wages. ([independent.co.uk](https://www.independent.co.uk/news/uk/politics/rachel-reeves-budget-national-insurance-ifs-b2628848.html?utm_source=openai))

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The narrative is current, with the earliest known publication date of similar content being 10 September 2025. The report is based on a press release from the Confederation of British Industry (CBI), which typically warrants a high freshness score. No discrepancies in figures, dates, or quotes were found. The content has not been republished across low-quality sites or clickbait networks. The narrative includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. ([cbi.org.uk](https://www.cbi.org.uk/media-centre/articles/cbi-responds-to-2024-labour-manifesto/?utm_source=openai))

Quotes check

Score: 9

Notes: The direct quotes from CBI chief executive Rain Newton-Smith are consistent with previous statements made in September 2025. No variations in wording were found, indicating the quotes are reused. No online matches were found for the specific phrasing used in the report, suggesting the content may be original or exclusive. ([cbi.org.uk](https://www.cbi.org.uk/media-centre/articles/cbi-responds-to-2024-labour-manifesto/?utm_source=openai))

Source reliability

Score: 10

Notes: The narrative originates from The Independent, a reputable UK news outlet. The Confederation of British Industry (CBI) is a well-established business lobbying group with a verifiable public presence. The CBI's chief executive, Rain Newton-Smith, is a known figure in the business community. All entities mentioned in the report are verifiable and legitimate.

Plausability check

Score: 9

Notes: The claims made in the narrative are plausible and align with known economic challenges and discussions regarding tax policies in the UK. The report lacks specific factual anchors, such as exact figures or dates, which could reduce the score and flag it as potentially synthetic. The language and tone are consistent with typical corporate and official communications. The structure is focused and relevant to the claim, without excessive or off-topic detail.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary: The narrative is current and based on a press release from a reputable source, with consistent quotes and plausible claims. The lack of specific factual anchors and the recycling of older material are noted but do not significantly impact the overall assessment.

UK politics
Tax policy
Economy