UK employers call for government action to boost earnings

Britain should allow workers to earn more before they start to pay National Insurance contributions and provide more childcare to boost living standards, one of country’s leading employers’ groups said on Monday.

The government of Prime Minister David Cameron has increased the amount of money people can earn before they start to pay income tax.

Some economists say a similar raise in the threshold for National Insurance contributions would give a boost to those on low incomes. Critics say the payments have only a limited bearing on welfare benefits received and have become more of a tax than an insurance premium.

Pay has been rising more slowly than inflation for most of the time since the financial crisis that began in 2007-8. Living standards are a central issue for the Bank of England as it considers when to start raising interest rates, and for political leaders ahead of a national election next year.

The CBI suggested raising the earnings threshold for paying social security contributions to £10,500 a year, up from about £8,000 now, by the 2020/21 financial year.

It also called for the extension of 15 hours free childcare per week to all children aged one and two, a benefit currently available only to parents of children aged three and four.