If the Chancellor wants growth he should abolish all taxes on jobs

The economic statistic we should all be most focused on is the number of job vacancies in the economy, writes James Reed in today’s Notebook If the Chancellor really wants growth he should abolish taxes on jobs Today, with Labour under new leadership, Chancellor John Healey has the opportunity to use his first Budget to get behind business, jobs and young people. Failing to do so was his predecessor’s big mistake. I warned before she implemented a £25bn increase in employers’ National Insurance that it would be a damaging tax on jobs and economic growth, and so it proved.

While Keir Starmer and Rachel Reeves talked a lot about growth being their number one priority, they failed to demonstrate much understanding of what drives entrepreneurship and job creation. Some of the early signs from Healey are encouraging. He has already pledged to devote today’s Budget to “bloody-minded entrepreneurs”, acknowledging small and fast-growing businesses have been hit by a barrage of fresh taxes and regulation. Healey concedes that the government’s overhaul of workers’ rights, as well as successive tax grabs, have left many firms under “a lot of pressure”.

So action on the cost of doing business needs to be as big a focus for ministers as on the cost of living. It is good that Healey appears to have ruled out any hike in capital gains tax because of concerns about the chilling impact on investment in the UK. I would also like to see a real focus on young people and their job opportunities. The economic statistic we should all be most focused on is the number of vacancies in the economy. The latest figures showed the largest fall since the start of the year, to 691,000.

The number has now been sliding for almost four years, and the ONS says it is clear that smaller firms are being put off recruiting by the cost of hiring. Ultimately, we should be looking to reduce – or even abolish – taxes on jobs. I have proposed funding this with new taxes on AI companies and those using their products to replace real workers: back humans, tax robots . The first step should be to increase the threshold at which businesses pay employers’ National Insurance.

This was lowered by Reeves from £9,100 to £5,000, alongside a rate increase to employer contributions from 13.8 per cent to 15 per cent. If there is to be a rise in the threshold for the basic rate of tax, it must apply to workers as well as pensioners. Healey has the chance to break with the mistakes of the past and show that Labour understands a simple truth: if we want growth, we must back the businesses that create jobs, give young people a chance and make it easier, not harder, to employ people.

Why punish family businesses? One quick and simple way to demonstrate that he is listening to business would be for John Healey to scrap Rachel Reeves’ disastrous inheritance tax raid on family businesses, which make up 93 per cent of all firms in the UK and employ 15.8m people. He should reinstate in full business and agricultural property relief, introduced in 1976 by Labour Chancellor Denis Healey to recognise the important role of family firms in our economy.

These changes have become a Trojan horse for asset strippers and business flippers. Incredibly, Labour is currently penalising family firms passed between generations but not applying the same tax treatment to foreign owners or private equity. As a result, many family firms aren’t investing and creating jobs and some founders have been driven to leave the country. Consigning Reeves’ changes to the dustbin would be an instant win. Pints and rabbits At her first Budget in 2024, Rachel Reeves got her biggest cheer from her own side when she announced a penny off a pint.

This is an age-old rabbit pulled from the Budget hat by Chancellors courting favourable publicity. It didn’t seem to occur to those cheering that they would have to drink over 500 pints before they got a free one, or that they should have been more concerned by the impact of the £40bn in tax rises that had also been announced. My advice is to apply a sceptical eye to whatever gets the biggest cheer today. The magic of a Saturday job A lady got in touch with me recently to share her experience, some decades ago, of having not one but two Saturday jobs at the age of 16.

She didn’t earn much, but she gained valuable experience which launched her career. Would she be employed in the same way today? Everyone wants young workers to be paid an appropriate amount, but isn’t it time for a grown-up conversation about existing policy on the minimum wage and its consequences? Has it reached levels where it is deterring employers from giving young people their first job? In what other areas of the economy do we think it’s okay for the government to dictate prices?

As we await Alan Milburn’s report on the NEETs crisis, this is an issue which we need to confront. The films I’ve been watching As a keen mountaineer myself, I have just watched two films on the subject. The first was Tenzing, a drama starring Genden Phuntsok as Tenzing Norgay and Tom Hiddleston as Sir Edmund Hillary. It is based on Nepalese-Indian Sherpa Norgay’s 1953 ascent of Mount Everest with Hillary. The second film was The Last First: Winter K2, a documentary which follows a team of mountaineers who attempt to make the first successful winter ascent of K2, the second-highest mountain on Earth.

Both films were excellent, but while the first was inspiring, the second one was profoundly sad, featuring several needless deaths and demonstrating how mountaineering has been commercialised in the intervening 75 years. James Reed is CEO and chairman of Reed Group