𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Job taxes imposed by Rachel Reeves have been branded the “silent killer of British aspiration” after unemployment across the UK hit a near five-year high. Conservative shadow chancellor Sir Mel Stride took aim at Ms Reeves following the release of official figures on Tuesday which showed the rate of joblessness rose to 5.2% – or over 1.8 million people – in the three months to December.

The figure had stood at 4.1% – or over 1.4 million people – when Labour took office in 2024, promising economic growth. For those in work, wages are still rising faster than prices but the rate at which they are growing continued to slow.

Sir Mel said: “In a year of economic incompetence, Starmer and Reeves have presided over a P45 Government that has seen 134,000 payrolled jobs vaporised.

“Unemployment has climbed to 5.2% – the highest it’s been since the pandemic, and the dream of a steady paycheque is slipping away for thousands.

“This decline is not an accident, it’s a choice.

“We are witnessing the predictable result of a front bench that lacks even a shred of real-world business experience.

“By increasing the cost of hiring, it is now clear that Labour’s Jobs Tax is the silent killer of British aspiration.”

A hike in employer National Insurance contributions and an increase in the minimum wage have hit firms hard.

The 5.2% rate of unemployment was the highest since the three months to January 2021, and outside of the pandemic era, it marks the highest since the autumn of 2015.

At the start of 2021, unemployment increased to 5.3% – or 1.9 million people – during the pandemic.

Now, it has risen from 5.1% in the three months to November, the Office for National Statistics (ONS) said.

Experts said young workers were among the hardest hit, with almost one in six left without a job.

The ONS said the unemployment rate for 16 to 24-year-olds surged to 16.1% in the latest quarter – the highest level since early 2015.

The Resolution Foundation think tank warned the UK’s youth unemployment is now higher than the EU average for the first time since records began in 2000, with the rate across Europe at 14.9% in the final three months of last year.

Reform UK’s newly unveiled Treasury spokesman Robert Jenrick said: “Our economy is broken and Rachel Reeves is making it even worse.

“More than 120,000 fewer people are in a job than a year ago. These are people’s livelihoods that are being lost, while the taxpayer is forced to pick up the bill.

“Reform will end her economically disastrous policies and bring back good jobs.”

Speaking at a press conference in London on Tuesday, Mr Jenrick said Reform UK would be looking at the issue of youth unemployment, which he said was higher than parts of Europe.

He added: “We’re going to set out our economic plans, but it’s going to be about reducing bills, having a sensible energy policy to make our country more competitive once again, reducing taxes as we can, and bring back good jobs in all parts of the country.”

Redundancies have also increased across the UK, according to the ONS data.

The official figures showed cuts increased by 11,000 to 145,000 in the final three months of last year, while the data also showed the number of workers on payrolls fell by 6,000 in the three months to December and is estimated to have dropped by 11,000 in January to 30.3 million.

It comes after recent growth figures showed the economy recorded meagre growth of 0.1% in the final three months of last year amid budget uncertainty and a lacklustre performance in December.

Businesses across the UK have halted hiring following Ms Reeves’s last two budgets.

When asked if the Government’s policies such as the employers’ national insurance rise and the Employment Rights Act are to blame for the five-year unemployment high, Social Security and Disability Minister Sir Stephen Timms said: “We’ve had to make some changes since the general election in order to rebuild the NHS and other things that needed to be done.

“But it’s important to make the point as well that there are 381,000 people more in work according to the figures than at the start of 2025. The ONS makes a point of highlighting the fact that economic inactivity has fallen in these latest figures.

“So one of the things that’s happening is people who’d given up on work previously are now looking for a job and of course they then move into the unemployment figures, but that’s a positive move because they’re looking for work and they’re open for opportunities.”

More than a third of employers say they are cutting hiring because of new workers’ rights, according to a survey from the Chartered Institute of Personnel and Development (CIPD).

The Employment Rights Act, which became law in December, guarantees workers entitlements including parental leave and sick pay from the first day of a job.

Ben Willmott, head of public policy at the CIPD, the professional body for HR and people development, said: “Against a backdrop of low business confidence and already weak hiring intentions, our research suggests there is a real risk that the Employment Rights Act measures will act as a further handbrake on job creation and recruitment.

“In response, it’s important that Government acts to try and mitigate these potential negative consequences, including through meaningful consultation and where necessary compromise on key measures still to be decided in secondary legislation.

“We need to see a major communication campaign from Government to ensure smaller businesses in particular are aware of, understand and can prepare for the new legal obligations and know when they come into effect. Just as important, the Government needs to ensure that Acas and the wider dispute resolution system have sufficient resources to help micro and small firms comply and avoid disputes and costly tribunal claims.”

Experts said the ONS data will reinforce expectations for the Bank of England to cut interest rates again next month, to 3.5% from 3.75% currently.

An expected drop in inflation on Wednesday in data is set to add to the argument for a rate reduction.