London Assembly Members have called for City Hall to lobby the Chancellor to reverse the decision
The Deputy Mayor for Business has been accused of being a “cheerleader” for the Labour government after refusing to pass judgement on the decision to hike national insurance on firms.
Howard Dawber said it was up to businesses to make representations to government over last year’s tax rise as Conservative Assembly Members said he was choosing “complicit silence” and “kowtowing” to the Chancellor instead of representing the capital’s businesses.
At the same Assembly-wide session at City Hall on Thursday (March 5), Allen Simpson, Chief Executive of UKHospitality, told Members the levy change was “socially regressive and cost us jobs”.
The policy, intended to raise £25billion from companies nationwide, saw National Insurance (NI) rates increase from 13.8 per cent to 15 per cent, while the payment threshold fell from £9,100 to £5,000. The impact on small London businesses has been stark, with new research from Novuna Business Finance suggesting 79 per cent of owners are losing sleep over challenges facing their firms, with thousands of jobs cut in the capital.
Mr Dawber was questioned by two Conservative Assembly Members over whether he backed Chancellor Rachel Reeves’s decision, but refused to give an answer.
He said: “Businesses have every right to identify everything that has a detrimental impact on their ability to employ people. It’s down to those businesses to make those representatives.
“Rachel did the right thing. I’m not going to criticise the government for the decisions they’ve taken. She had a really difficult job to do to raise [revenue]. I know that the Chancellor inherited a dysfunctional economy after 14 years of [Conservative] government.
“We’re in a position where we have headroom in the public finances, for the first time in ages.”
Emma Best, Deputy Leader of the City Hall Conservatives, told the Local Democracy Reporting Service (LDRS): “The Deputy Mayor has been given plenty of opportunities to raise his voice about the damaging impact of Labour’s ill-thought-out National Insurance hike.
“Despite being the voice, supposedly, of business in the capital, he has chosen complicit silence – kowtowing to his Government – rather than doing his job. We don’t need to pay a Deputy Mayor over £150,000 plus all associated staffing costs just to be a cheerleader for Rachel Reeves.
“The Deputy Mayor should go and let us just invest that money directly into supporting our high streets and nightlife economy.”
The London Assembly also questioned Mr Simpson about the impact of the NI rise on the hospitality sector in the capital. UKHospitality estimates that almost 89,000 jobs in restaurants, bars, pubs and hotels were lost between the policy announcement in October 2024 and August 2025, while a further 9,000 have been slashed since November alone.
“It is worth saying that is an unprecedented single sector impact,” he said. “When the Chancellor delivered her first budget, the sector was growing 6% year on year, it was the fastest growing sector in the economy, and then immediately like that, those jobs went.
“That’s more people than are employed in the entire steel industry, for example. I cannot think, and I include the 1980s in this, of a single sector jobs loss equivalent.”
The impact on London’s firms is proportionate to the rest of the country, he noted, adding: “There’s 3.5 million jobs in the sector nationally, about 600,000 of those are in London. There is nothing specific about London which would mean that that would be higher or lower.”
Mr Simpson said the impact of the NI rise in London was “socially as well as economically damaging”, saying: “Hospitality is the single largest employer of school leavers, it’s the single-largest employer of people who work part-time around their other responsibilities.
“You are having direct impacts on routes into other forms of work, you are taking out periods of people’s lives where they learn all sorts of soft and hard skills.”
Asked if he would like to see Sir Sadiq Khan and his deputies speak up, he said: “I would like to see courage from our Mayors in arguing against the cost of employing young people and people at the early part of their career in particular.”
In January, the Mayor of London also refused to criticise the NI increase, telling Ms Best: “None of us like paying more taxes or NI. None of us like seeing a reduction in public services.
“However, if the government does not get on top of the deficit, do not be surprised if the markets mean we are paying more in interest, which means, rather than either providing public services or tax cuts, we are having money leaving our country by going to interest rate repayments. I do not want that to happen.”
The City Hall Conservatives did manage to pass a non-binding motion by 14 votes to 11 calling on the Mayor to lobby the government to reverse the NI hike, with Reform UK, the Liberal Democrats and the Greens joining forces.
Proposing the motion, Neil Garratt said: “Labour is deliberately pricing young people and low-skilled people, less experienced people, out of work.
“Every Labour government leaves office in disgrace with more unemployment than when they arrived. This one is already well on its way. This excellent motion tries to get Labour to identify some of the damage and to reverse it.”
After the vote, he added: “I hope that the government recognises the impact that their National Insurance hike is having, and reverses it at the first opportunity – and that the Mayor of London listens to the Assembly’s decision today and lobbies for London.”
The Mayor’s office was contacted for comment on his response to the motion, with a spokesperson telling the LDRS: “Sadiq is proud to be London’s most pro-business Mayor ever and continues to do everything he can to support businesses – both large and small – in the capital. This has included standing up for businesses in the face of a damaging hard Brexit, supporting businesses through the pandemic, training Londoners to ensure they have the skills businesses need, helping to create over 333,000 jobs in the capital, and championing London as the best city in the world to invest, start and scale up a business.
“London remains the best city in the world for business – an economic powerhouse bristling with creativity, innovation and enterprise. But some businesses are facing challenges, including high costs. That’s why the Mayor has been urging the government to re-examine business rates thresholds and consider reforms that would take into account the considerably higher costs businesses in London face.
“The Mayor will continue to stand up for London and London’s businesses as we build a better, more prosperous London for everyone.”
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