Rachel Reeves will be guilty of a “straightforward breach” of Labour’s election manifesto if she goes ahead with raising employers’ National Insurance (NI), a leading economic think tank has warned.

       Paul Johnson, the director of the Institute for Fiscal Studies (IFS), said the Chancellor would “almost certainly” have to breach the manifesto if she wants to raise large amounts of money.

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       On Sunday, a Cabinet minister gave the strongest hint yet that an increase in employers’ NI contributions was being considered as part of the Budget, which takes place on Oct 30.

       Jonathan Reynolds, the Business Secretary, said the manifesto commitment not to raise NI did not include employers’ contributions but referred only to “taxes on working people”.

       On Monday morning, Mr Johnson questioned this, telling Times Radio: “Let’s see whether she does it. I mean, it seems to me that would be a straightforward breach of a manifesto commitment. I went back and read the manifesto, and it says very clearly ‘we will not raise rates of National Insurance’. It doesn’t specify employee National Insurance.

       “But set that to one side, I think if she does want to raise genuinely significant amounts of money, then she almost certainly will have to breach that manifesto one way or another. And it’s probably less damaging to raise National Insurance or income tax or VAT than it would be to try and get similar amounts in other ways.

       “So, would this be dramatically damaging if it was another penny on National Insurance? I mean, frankly, probably not.

       “They would raise significant amounts of money as well, employer National Insurance, one penny gets you something like ￡16 billion or ￡17 billion a year. So it’s a big chunk of money from a relatively small, proportionate change in a very big tax.”

       Labour’s manifesto said: “We will ensure taxes on working people are kept as low as possible. Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of income tax, or VAT.”

       At Prime Ministers’ Questions last week, Sir Keir Starmer refused on three occasions to deny that employers’ NI could go up.

       Robert Jenrick, the Tory leadership contender, has called a rise in employers’ NI contributions “tax on jobs”, saying it would leave companies with less money to invest.

       Mr Johnson also downplayed the importance of the UK’s investment summit, held at London’s Guildhall. The IFS director said: “It seems to me surprising that companies would decide to do these sorts of things on the basis that they’ve been invited to a summit.

       “My guess is that most of these things were going to happen anyway and they’ve decided to announce them at this point, but there may be additional things here. But yes, of course, the actual investment is real. Whether it’s real because of this summit or whether it would have been real anyway, I don’t know.

       “Of course, it’s absolutely vital to the economy that these things happen. So yes, this is all terribly important, it’s all absolutely vital for the economy.

       “But is this a sort of sudden one-off surge, which is going to make an enormous difference over the next few years relative to the last few years? I think that’s less likely. I think this is the sort of investment that you need just to keep the economy going.”

       It comes after City figures including the chief executive of Lloyds Bank, Britain’s biggest lender, said NI would be one of the “worst taxes” to increase because it would be a “handbrake” on investment and make it more expensive for businesses to hire staff.

       Kate Nicholls, the chief executive of UK Hospitality, said: “This is a tax on jobs. An increase in NICs makes it harder to employ people and to take a risk on recruitment and expansion, because the costs of it will be so much higher.”

       Lord Spencer, the billionaire investor and a Tory donor, accused Labour of breaking its promise not to tax working people.

       But asked whether raising NI in any way would be a breach of Labour’s manifesto, the Prime Minister’s spokesman said: “We’ve responded to questions on this previously. Obviously, I can’t get into speculation on the Budget, and you’ve got language from the Business Secretary over the weekend.

       “Ultimately, the Government uncovered a ￡22 billion black hole in the public finances, which will require difficult decisions to fix the foundations of the economy so that we can rebuild Britain and make every part of the country better off.

       “But, of course we remain committed to the manifesto, which says we will ensure taxes on working people are kept as low as possible, which is why we will not increase National Insurance, the basic higher or additional rates of income tax, or VAT.”