Labour’s jobs disaster… as 𝘙𝘦𝘦𝘷𝘦𝘴 comes back for MORE tax: Unemployment surges to four-year high with wage rises slowing – but public sector still enjoys bumper pay deals

Rachel 𝘙𝘦𝘦𝘷𝘦𝘴 was today warned she must not batter businesses again at the Budget after unemployment hit a four-year high.

Grim figures showed the jobs market crumbling, with redundancies rising, as the Chancellor prepares to impose more tax hikes.

Analysts said the numbers were effectively chickens coming home to roost after Ms 𝘙𝘦𝘦𝘷𝘦𝘴 piled costs on firms at her previous big fiscal package a year ago.

Meanwhile, struggling Britons saw a slowdown in their pay increases – apart from the public sector, which is benefiting from bumper settlements.

The unemployment rate was 5 per cent in the three months to September, up from 4.8 per cent in the three months to August. That was the highest level since early 2021, and above the 4.9 per cent expected by economists.

The ONS said average regular wage growth also pulled back again, to 4.6 per cent in the three months to September, down from 4.7 per cent in the previous three months, and was 0.8 per cent higher after taking CPI inflation into account.

Wage growth is now the lowest seen since April 2022.

However, while the private sector only saw 4.2 per cent rises between July and September, the public sector workers enjoyed 6.6 per cent earnings growth.

Recent inflation-busting pay deals include London Underground staff, whose wages will rise by at least 8.9 per cent over the next three years.

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The rate of UK unemployment rose to 5 per cent in the three months to September, from 4.8 per cent in the three months to August, the Office for National Statistics said

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Rachel 𝘙𝘦𝘦𝘷𝘦𝘴 was today warned she must not batter businesses again at the Budget after unemployment hit a four-year high

The ONS said the number of workers on UK payrolls fell by 32,000 during October to 30.3million, following a 32,000 drop the previous month.

ONS director of economic statistics Liz McKeown said: ‘Taken together these figures point to a weakening labour market.

‘The number of people on payroll is falling, with revised tax data now showing falls in most of the last 12 months.

‘Meanwhile the unemployment rate is up in the latest quarter to a post-pandemic high.’

She added: ‘Wage growth in the private sector slowed further, but we continue to see stronger public sector pay growth, reflecting some pay rises being awarded earlier than they were last year.’

Ms 𝘙𝘦𝘦𝘷𝘦𝘴 suggested yesterday that the only way she could keep Labour’s promises not to increase income tax, national insurance or VAT was to cut investment – something she has ruled out.

She also all-but declared that the two-child benefit cap will be scrapped, saying families should not be worse off because they had more children.

One move being mooted is for Ms 𝘙𝘦𝘦𝘷𝘦𝘴 to increase income tax by 2p, but cut national insurance by 2p on earnings under £50,000 a year.

That would offset some of the pain, while still raising around £6billion extra for the Treasury.

Isaac Stell, Investment Manager at Wealth Club said: ‘There will be no pre-budget comforts that can be taken from today’s employment data as the un-employment rate hits its highest level since May 2021. This self-inflicted wound rather than heeling continues to weep.

‘Not only has the unemployment rate risen, but wage growth, albeit still rising ahead of inflation continues to shrink. There can be no doubt that the fiscal levers pulled by the Government and the Chancellor have significantly contributed to these figures and the responsibility lies at their feet.

‘With speculation around the Budget reaching fever pitch, businesses have postponed hiring and are less likely to commit to any form of investment until they know where the economic land lies.

‘The stakes couldn’t be higher for the government and with further tax rises guaranteed at the budget, the fiscal landscape for employers and employees looks to be on ever shakier ground.’

Suren Thiru, ICAEW Economics Director, said the chances of a December interest rate cut might be boosted by the dire picture.

‘These figures suggest that the UK’s labour market is suffering from pre-Budget jitters, as businesses already weakened by April’s rise in national insurance look to cut recruitment further in anticipation of another difficult Budget,’ he said.

‘This weakening in wage growth is likely to accelerate over the winter as the downward pressure from an ailing economy, significant staffing costs and more job losses increasingly restrains pay awards.

‘The jobs market could bear the brunt of Budget tax rises as weaker customer demand, amid a possible income tax hike and increasing costs on business, may mean higher unemployment than the Bank of England currently predicts.

‘These underwhelming figures add credence to the more dovish tilt to last week’s policy decision and the current rate at which the labour market is loosening notably increases the chances of a December interest rate cut.’

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Employment was also down in the latest figures

Work and Pensions Secretary Pat McFadden said: ‘Over 329,000 more people have moved into work this year already, but today’s figures are exactly why we’re stepping up our plan to get Britain working.

‘We’ve introduced the most ambitious employment reforms in a generation to modernise Jobcentres, expand youth hubs and tackle ill-health through stronger partnerships with employers.

‘And this week we’re going further by launching an independent investigation that will bolster our drive to ensure all young people are earning or learning.

The Conservatives said the Government’s policies were ‘driving opportunity out of Britain’ as unemployment rose to 5 per cent.

Shadow work and pensions secretary Helen Whately said: ‘Under this Labour Government, we have now experienced 13 consecutive months of rising unemployment.

‘That’s thousands of families without the security of a regular pay packet thanks to the Chancellor’s bad choices hiking up taxes on jobs, piling red tape on businesses, and destroying confidence in the economy.

‘And because the Government doesn’t have the backbone to take tough decisions, these same families now face even more punishing tax rises, despite the Chancellor’s promise that they’d never come.

‘Their high-tax, anti-business policies are driving opportunity out of Britain and making life harder for families and those searching for work.

‘And with an impending Budget of further tax rises, the situation is only going to get worse.

‘Only the Conservatives have the team and the plan to unleash businesses, grow the economy, cut waste, and get Britain working again.’

‘We’re backing businesses to grow and create jobs by cutting red tape, signing trade deals and securing hundreds of billions in investment, which helped make the UK the fastest growing economy in the G7 in the first half of this year.’

The Liberal Democrats called for the Government to reverse last year’s national insurance increase in response to rising unemployment.

Lib Dem Treasury spokesperson Daisy Cooper MP said: ‘Surely the writing is on the wall now for the Chancellor’s jobs tax?

‘Everyone except Rachel 𝘙𝘦𝘦𝘷𝘦𝘴 seems to have woken up to the fact that forcing small businesses to pay more in tax for giving people jobs would damage job opportunities. Now the proof is staring her in the face.

‘The Government must reverse their damaging national insurance hike at the Budget, and commit to saving the small businesses who employ millions in Britain and are at risk of collapse, if they’re to have any hope of reversing today’s concerning trend.’

ONS director of economic statistics Liz McKeown said: ‘Taken together these figures point to a weakening labour market.

‘The number of people on payroll is falling, with revised tax data now showing falls in most of the last 12 months. Meanwhile the unemployment rate is up in the latest quarter to a post pandemic high.

‘The number of job vacancies, however, remains broadly unchanged.

‘Wage growth in the private sector slowed further, but we continue to see stronger public sector pay growth, reflecting some pay rises being awarded earlier than they were last year.’