Peter Mandelson: Labour could use National Insurance rise to fund NHS

Labour could raise National Insurance to help fund the National Health Service, Lord Mandelson says.

The peer – who was one of the key strategists who made Labour electable in the 1990s – said he could see why the party was looking at taxing some parts of the economy like private equity.

But he warned any future Labour administration against overtaxing entrepreneurs and strangling companies that want to grow.

Labour is coming increasingly under scrutiny over its tax plans. The party has already said it wants to axe non-domiciled tax status and remove tax breaks from private schools.

Earlier this week Rachel Reeves, the shadow chancellor, clarified that Labour would not increase capital gains tax after Angela Rayner, the party’s deputy leader, suggested it was under review.

Speaking to The Telegraph’s Chopper’s Politics podcast, Lord Mandelson pointed to how Sir Tony Blair, the former prime minister, had looked at raising National Insurance to pay for more spending on the NHS when he was in 10 Downing Street.

“We said, ‘Look, the National Health Service needs very considerable investment and therefore we’re going to put to you that we should have a National Insurance charge increase and that would be dedicated to the National Health Service’.”

Asked if Sir Keir Starmer’s party should do the same, he added: “Let’s see whether history repeats itself on that.”

He added: “Look – I’m not making the tax and spend policies of Labour’s frontbench. All I’m confident of is that they’re not going to take risks with the economy.”

Asked if the prospect of Labour increasing taxes on dividends was a concern, Lord Mandelson replied: “Maybe, it may be. But I would be surprised if the Labour Party goes into the next election committed to personal tax rises and increases. But we are in a financial straitjacket, there’s no question about that.”

A similar idea on National Insurance was planned and then dropped by the Conservative Government during a chaotic few months last year.

Lord Mandelson warned a future Labour chancellor against overtaxing British businesses: “How is our economy going to grow if we don’t create new businesses? They pay their taxes, but you want to incentivise people to take those risks.

“Otherwise you will not have the start-ups, the new businesses, the risks that people take when they grow those businesses. It’s very important.”

But he backed Labour’s plans to increase tax on the private equity industry. “I’ve had many people say to me, why should the private equity people not pay the same taxes I have to pay on my income or my dividends?

“Some people pay 45 per cent and the others 25 per cent – why is that fair?”

Listen to the full interview with Peter Mandelson on Chopper’s Politics, The Telegraph’s weekly political podcast, using the audio player in this article or on Apple Podcasts, Spotify or your favourite podcast app.