Badenoch presses Starmer on National Insurance and council tax at PMQs

Another lively PMQs saw Prime Minister Keir Starmer challenged on the rise of employers’ National Insurance contributions (NIC) and winter fuel payment cuts, as opposition leader Kemi Badenoch accused the government of not thinking through the impact of the Budget.

In her second PMQs, Badenoch adopted a “waspish and mischievous tone”, the BBC’s Chris Mason writes. Before asking her first question she reminded the prime minister that “at the end of the day I’m the one he has to face at the dispatch box”.

Ed Davey, the leader of the Liberal Democrats, quizzed the PM on ongoing support for Ukraine in the aftermath of Donald Trump’s election victory in the US. Starmer says the government is looking at how Ukraine could be put “in the best and strongest position”.

Following his return from the US, Reform UK leader Nigel Farage asked why Iran’s Islamic Revolutionary Guard Corps isn’t proscribed as a terrorist organisation, highlighting the group’s alleged assassination plot against Donald Trump. Starmer says it is under review.

That’s all from us this week, we’ll be back for another round of PMQ’s next Wednesday as Starmer faces Badenoch for another set of challenging questions.

Starmer refers to the £22bn black hole againpublished at 13:29 Greenwich Mean Time

By Anthony Reuben

Defending the Budget, the prime minister referred again to the £22bn black hole in the public finances that he says his party found when they came into government.

More detail was given about the source of that shortfall in reports accompanying the Budget.

BBC Verify has previously examined the claim, which you can read more about here.

But it’s worth mentioning that while there was a claim of a £22bn shortfall, the Budget increased spending by £70bn a year and increased taxes by £40bn a year.

National Insurance Contributions (NICs) are the UK’s second-largest revenue stream behind income tax. It is paid by workers and the self-employed on earnings and profits, and by employers on top of the wages they pay out.

In the Budget, Chancellor Rachel Reeves announced a rise in employers’ NICs from 13.8% to 15%. The threshold for paying the contributions was also lowered to £5,000.

To put that into context, employers used to pay National Insurance of 13.8% on a worker’s earnings above £175 a week, before the rise to 15%.

Companies are now set to pay NI at 15% on salaries above £5,000 from April, up from 13.8% on salaries above £9,100, raising an additional £25bn a year

It’s important to point out that this doesn’t include those working in the public sector, but there are many public services provided by private operators, eg many GPs, who may be impacted by the rise.

Luke Mintz
Politics reporter

One interesting exchange earlier was on employer National Insurance (NI).

Conservative leader Kemi Badenoch laid out the types of organisations that might be affected by Labour’s tax rise – including “care homes, GP surgeries, children’s nurseries, hospices, and even charities”.

In response, the prime minister insisted that they are not raising taxes on “working people”. He also said the government has put money into local authorities.

That “working people” phrase has become familiar across Westminster in recent months. It’s the same wording that was used in the Labour manifesto – and the same phrase that’s been trotted out by Labour ministers in various media interviews since.

The prime minister seems to be hoping that voters don’t view employers as “working people” – and so don’t see the NI rise as a breach of Labour’s election manifesto. But economists say the rise in National Insurance will ultimately feed through to ordinary people through lower wages and higher prices.

As criticism of the tax policy mounts, it may become difficult for the prime minister to continue relying on that “working people” definition.

Kemi Badenoch’s second Prime Minister’s Questions was a lively one, as Keir Starmer was pressed on the Budget, Ukraine and Donald Trump.

If you’re just joining us, here’s what happened:

• Badenoch focused her line of questioning on employers’ National Insurance contribution (NIC) increases, repeatedly challenging Starmer on the tax increases faced by small business owners
• The Tory leader also accused the government of not thinking through the impact of its Budget, which prompted Starmer to hit back and point out to the swathe of new investment into the public sector

• Liberal Democrat leader Ed Davey asked if GPs and other health professionals will be exempt from the NI increase. Starmer said funding arrangements will be laid out later in the year
• Davey also asked about the ongoing support for Ukraine, with Starmer saying his government is looking at “how we put Ukraine in the best and strongest position”
• Nigel Farage asked why Iran’s Islamic Revolutionary Guard Corps (IRGC) isn’t proscribed as a terrorist organisation as he spoke of the group’s alleged assassination plot against Donald Trump. The prime minister says it is under review
• Challenged on winter fuel payment cuts, Starmer reiterated pensioners will be better of because of the triple lock

Before this week’s PMQs wrapped up, SNP MP for Argyll, Bute and South Lochaber Brendan O’Hara said pensioners near his constituency have told him they have “no idea” how they’ll heat their homes this winter.

O’Hara was referring to the government’s winter fuel payment cuts, which have been a point of staunch criticism from the opposition and some of Labour’s own backbenchers.

Starmer said the government had to make difficult decisions during the Budget as they seek to stabilise the economy. Those tough decisions, the PM said, meant the government was able to commit to the triple lock which will support pensioners.

“Because of the triple lock pensioners will be better off,” he added.

In frustration, Starmer goes on to say he will take no guidance from the SNP in running the economy as the SNP’s track-record in Scotland is “terrible”.

• Under the triple lock, the UK state pension increases each April in line with whichever of these three measures is highest: inflation in the September of the previous year; the average increase in total wages across the UK for May to June of the previous year; or 2.5%

Badenoch adopts mischievous tone as she focuses on National Insurancepublished at 12:35 Greenwich Mean Time

Chris Mason
Political editor

This was the second outing for Kemi Badenoch as Conservative leader at Prime Minister’s Questions – a crucial platform for her each week in shaping her leadership, both in terms of how she is perceived at Westminster, on her own side, and introducing herself to the country.

Her first outing was overshadowed by the victory of Donald Trump just hours earlier last week, so in many senses this felt like a debut, particularly on a broad range of domestic issues as opposed to the immediate reaction to the prospect of a new American president.

A consistent theme is the ongoing questions about the increase in employers’ National Insurance contributions.

Badenoch had a particular example – a staple technique at PMQs – with her reference to Kelly, who runs an after school club and faces a colossal increase in her tax bill.

Sir Ed Davey, the Liberal Democrat leader, picked up the same theme – and its implications for parts of the health and care service that are private enterprises.

It is an issue that puts government ministers on the defensive – and is likely to continue to do so.

Early indications point to the new Conservative leader adopting a waspish and mischievous tone to her PMQs questions – she has a different tone to her predecessor Rishi Sunak, reflecting their different characters.

It will be fascinating to see how the exchanges between Starmer and Badenoch develop in the coming months.

Reform leader Nigel Farage now questions the prime minister, but first he says the whole House will congratulate Donald Trump in his election victory. A mixed response descends on the Commons.

He raises Iran’s alleged assassination plot on Trump and asks why Iran’s Islamic Revolutionary Guard Corps (IRGC) aren’t proscribed as a terrorist organisation?

Starmer says he’s glad to see Farage make a “rare appearance” back in Britain, after his time in the US, causing laughs from his MPs.

He says on his point about proscription, the government will keep it under review.

Awkward questions about Trump will become a theme for the PMpublished at 12:29 Greenwich Mean Time

Luke Mintz
Politics reporter

One notable question earlier came from Liberal Democrat leader Sir Ed Davey, on Britain’s relationship with the US.

Davey highlighted a recent Instagram post in which Donald Trump’s son joked that Ukrainian president Volodymyr Zelensky was about to lose his “allowance”. Davey asked whether the UK will step up support to Ukraine if US aid melts away.

Awkward questions like these are likely to become a theme for the prime minister over the next few years.

After Trump’s presidential election win last week, senior Labour figures have been keen to emphasise their strong friendship with the incoming Trump administration. On Monday the prime minister told reporters he has a “good relationship” with Trump, emphasising the “positive” and “constructive” two-hour dinner they shared in New York in September.

But some of Trump’s policies – particularly on Ukraine and the climate – are deeply unpopular with MPs in the prime minister’s own party, as well as some opposition MPs.

The prime minister will have to walk a delicate tightrope on the issue.

We hear now from the leader of the Lib Dems, Sir Ed Davey, who brings the discussion back to the employers’ National Insurance contribution hike included in the Autumn Budget.

Davey says GPs in his constituency have contacted him over the issue, and asks Starmer if he will “at least exempt GPs, community pharmacists and other health professionals?”

“I understand the concern,” says Starmer,

He says he has “made a huge investment in our NHS… almost all the people working in the NHS are very pleased to see that investment in them and in the service”.

“The funding arrangements will be laid out in the same way later this year,” he adds.

Davey uses his second question to ask about ongoing UK and European support for Ukraine – and suggests seizing Russian assets, rather than just seizing interest on those assets.

Starmer says his government is looking at “how we put Ukraine in the best and strongest position at this time”.

Badenoch continues to say that the Labour government’s Budget was designed to “milk the private sector”, but that there will be knock-on effects for the public sector – for example, when they have to pay private providers for care.

She asks the prime minister if he thinks it’s appropriate for council workers to work a four-day week – saying that equates to part-time work for full-time pay.

Starmer responds by saying in 14 years the Tories delivered low growth, a stagnant economy, a disastrous mini budget, and a £22bn black hole.

He finishes by saying he doesn’t want her advice on the economy.

Badenoch says the increase in employers’ National Insurance contributions (NIC) put forward by Keir Starmer’s government will be a disaster. She goes on to tell the story of someone called Kelly, who runs an after school club, who will have additional costs in taxes following the government’s Budget last month.

What does the PM have to say to Kelly, Badenoch asks.

Starmer says his government is “fixing the mess that we were left” and investing in the UK.

Badenoch then questions Starmer on councils, who she says need to find an additional £2.4bn in council tax next year, in order to pay for extra social care costs.

She says that while he was away at COP, his deputy PM hasn’t told him of their £2.4bn black hole.

Starmer gets cheers from his MPs when he says that after two weeks in office, the Conservative Party “have learnt nothing”.

He continues, saying his party have taken difficult decisions in the the Budget to fix the £22bn black hole they left and investing in the future of the country.

Badenoch comes back now with a focus on the council tax issue, and whether the levy will have to be increased to cover social care costs.

She calls Rachel Reeves a “copy and paste chancellor” and claims “it is clear they had not thought through the impact of the Budget”.

Starmer comes back on this by saying the Budget “does not increase tax on working people”, saying people are paying nothing more “in the payslip” saying the government is “investing in our NHS, investing in our schools”.

He adds if she’s “against those things she should say so”.

Badenoch goes on to ask her second question, in which she asks how much extra money local authorities will have to raise to cover the gap in National Insurance Contributions in social care.

Starmer respond by saying he said this a moment ago, saying the amount is £600m.

• As a reminder, the government recently announced an increase in NICs for employers (excluding the NHS and wider public sector) – meaning wage bills will rise for many sectors, including private providers of care. Read more on that here.

In response, Prime Minister Sir Keir Starmer says he is very proud that his government is restoring leadership on climate on behalf of the UK, adding that it was important to be in attendance at the climate summit in Baku, Azerbaijan.

“On the question of council tax, she knows what the arrangements are,” Starmer adds.

Badenoch tells Starmer that he can question his backbenchers as much as he likes, but that “at the end of the day I’m the one he has to face at the dispatch box”.

She welcomes him back from his trip to Azerbaijan and struggles to get the first question out as members in the chamber begin talking over her.

She then asks if the prime minister will confirm that he will keep the cap on council tax.

• For context: Councils in England are not usually allowed to increase council tax by more than 5% a year without special processes.

Chris Mason
Political editor

Hello from the press gallery of the House of Commons.

It is Kemi Badenoch’s second outing as Conservative leader at the dispatch box.

The prime minister began with a rather defensive case for why he went to the COP climate summit in Azerbaijan this week – talking about what he sees as the specific short term perceived benefits of doing so for the UK, such as energy security, as well as the longer term huge questions climate change poses.

And we’re off – Prime Minister Keir Starmer is standing at the dispatch box opposite Kemi Badenoch.

Stay tuned as we bring you the latest, and you can follow all the action in our stream at the top of the page – just click the Watch Live button.

With Keir Starmer set to start PMQs at midday, let’s head over to the House of Commons.

MPs are in their positions on the green benches as Kemi Badenoch and members of her new shadow cabinet prepare to take their seats opposite the prime minister.

Our team of writers in London will bring you the latest updates. To follow along with the action in the Commons you can click Watch live at the top of this page. Stay tuned.