Rishi Sunak has a tax warning for Rachel Reeves - if she ignores it we face a nightmare
Reach Daily Express March 22, 2026 05:39 AM

Fair play to Rishi Sunak, he didn't abandon Parliament when the country pulled down the shutters on 14 years of Conservative rule and Sir Keir Starmer moved into his former apartment in Downing Street. Mr Sunak remains the MP for the beautiful constituency of Richmond and Northallerton and he has a vital message that Chancellor Rachel Reeves ignores at our peril.

When he was in office he was mocked for his love of California. But he understands that the revolution ignited by the Silicon Titans there will change all our lives and has the potential to unleash jobs destruction.

Britain is haunted by the collapse of heavy industry. Visit a community centred on the former site of a steelworks and you sense a heartbreak that never heals, especially if households are still blighted by poverty and the crushing of ambition.

Regeneration is hard work and successive governments have discovered just how difficult it is to "level-up" towns and cities that were once powerhouses. The closure of mines and the demolition of once-mighty factories came with immense human cost, and Britain needs to do everything possible to ensure the Artificial Intelligence revolution brings prosperity rather than mass unemployment.

Mr Sunak looks at Britain and sees danger. We have a Government that has made it more expensive and risky for an employer to take on a flesh and blood employee, right at the moment when AI is on the march.

He writes in the Times that "perhaps the most significant change we need to make" is to the tax system. "At the moment," he warns, "it is tilted against hiring people: as soon as a company takes someone on, it has to pay employers' national insurance. The rise in unemployment since Labour raised the level of these contributions in its first budget shows how sensitive employers are to the level of this tax."

In his understated way, he argues this is "particularly problematic at a time when firms are exploring what roles can be replaced by artificial intelligence; employers pay no tax on the AI agents they use."

He favours the reduction and eventual removal of taxes on employment. These are the words of a reasonable radical who understands the calamity that will hit the country if humans are priced out of the economy.

It is not just call centre staff who are at risk when bosses connect their businesses to a giant digital brain. Highly-paid lawyers and accountants may experience the same insecurity and fear which shook Britain's steeltowns and pit villages in recent decades.

The key choice, as he sees it, is whether AI is used to "automate jobs" - in which case Britain will have permanently higher unemployment - or whether it is harnessed to "augment work that people are doing". If the latter option wins the day, if workers are handed AI superpowers, Britain could finally escape the low productivity quagmire in which we have been trapped for a generation and we could win higher wages.

We will not enjoy an AI-fuelled renaissance without brilliant leadership, and the very polite Mr Sunak is right to signal that the Chancellor's decision to wallop businesses with a tax on jobs is utterly destructive.

Mr Sunak probably spends a portion of each day trying to make sense of his political career but, thankfully, this former Prime Minister has his gaze fixed on the future.

In an alternate universe, perhaps, he beat Liz Truss in the 2022 Tory leadership contest and persuaded the country to stick with the Conservatives in the 2024 election. Right now, in our world, he is out of power but he has a seat in the Commons and we can only hope Sir Keir and Ms Reeves heed his warning and do everything they can to encourage bosses to employ humans.

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