Debate contribution: Front-line Services: Employers’ National Insurance Increase

Debate contribution by Dr Caoimhe Archibald on 13 January 2025.

MLA

Dr Caoimhe Archibald

Party at the time

Sinn Féin

Date

13 January 2025

Type

Debate contribution (made as a minister)

Business

Private Members' Business

Heading

Front-line Services: Employers’ National Insurance Increase

Assembly identifier

Official Report component 4738740

Read the official Assembly record

Text

Go raibh maith agat, a Leas-Cheann Comhairle

and happy new year to you too. I welcome the opportunity to address the House on this important matter, and I thank the Members who tabled the motion and those who tabled the amendment. It will not come as any surprise to them, I am sure, that I have done what the motion asks for. I am sure that they would expect nothing less of me. The planned increase to employers' National Insurance contributions will prove incredibly challenging for our businesses, our community and voluntary sector and our public-sector employers, including councils. Devolved Governments simply do not have the financial capacity to compensate for decisions made on reserved taxation matters. The British Chancellor said that support will be provided for Departments and public-sector employers, but that is unlikely to be sufficient to meet the increased cost across the board. I have written to the Chief Secretary to the Treasury asking for the costs to be met in full, and I have appealed for consideration to be given to those outside central government who provide and support us to provide public services. My Department has been working with Departments to ascertain the additional total cost of increased employers' National Insurance contributions for the public sector, including the independent providers. The current assessment is that the additional cost facing Departments and other central government bodies as a result of the changes in 2025-26 is likely to be at least £200 million and potentially higher. That does not include the cost facing healthcare providers or councils. For example, the Department of Health has estimated an additional annual cost of over £35 million for family health service providers, which include GPs and dentists. I understand that the Department for Communities has received information from local government that estimates an additional cost to councils of around £12 million. Those are huge additional costs for our vital public-sector providers. There appears to be some confusion surrounding announcements that were made in England before Christmas of funding for councils. To be clear, we have not yet received formal confirmation of the Barnett consequentials that we will receive in respect of National Insurance increases. However, it looks as though what will be provided through Barnett consequentials will fall far short — by tens of millions of pounds — of what is required to meet our increased costs. This was a decision taken in Westminster on a reserved taxation matter. The Executive do not have the ability to mitigate such decisions. The Treasury must, therefore, meet those costs in full so that we are not limited in our ability to deliver public services. The Scottish Finance Minister is of the same view, which is that the funding that devolved Administrations will receive is unlikely to be sufficient. The British Government have said that additional support will not be provided for voluntary and community sector organisations. Like Diane and others, I acknowledge the huge role that our community and voluntary sector plays in helping us to deliver public services. It is extremely disappointing and concerning that they have not recognised the need to provide support for or to mitigate the impact of the changes to National Insurance contributions for the sector. I am extremely disappointed by that, given the critical role that voluntary and community sector organisations play in delivering services to all citizens here, including providing support for some of our most vulnerable individuals. The voluntary and community sector has faced a double blow, as some Members mentioned. Some of those organisations receive Shared Prosperity Fund funding, which will be cut in the next financial year, at the same time as their bills increase. In a recent survey of 68 organisations, NICVA found that 76% expect there to be major financial impacts, with many facing additional annual costs of between £5,000 and £200,000 from April 2025, and one social care provider anticipating costs of between £200,000 and £500,000. I raised that issue with the Minister for Housing, Communities and Local Government when I met him in December and urged reconsideration of that approach. The Executive's Budget is extremely constrained, with demands for funding that far outstrip the available funding. I will continue to press the British Government on the need for support or mitigations to ease the impact. In doing that, I am keen to present as strong a case as possible. Therefore, in December, my Department commissioned Ulster University's Economic Policy Centre to carry out a sectoral study into the cost of doing business here. I asked it to present evidence on the impacts of the planned increases to National Insurance and other potential cost pressures such as insurance and energy. It is important that we hear the voices of those who will be impacted on, which is why the Economic Policy Centre team will engage with business bodies, the public and the community and voluntary sector as it undertakes the research, which will be concluded by the end of March. The terms of reference have been published on my Department's website. I am keen to understand which sectors will be hit the hardest and whether the impacts and costs are more severe for sectors and businesses here, given the size and structural differences when compared with Britain. My Department is leading that research, but the National Insurance increases will impact on the whole public sector. Other Departments will therefore be engaged as the work progresses. I urge any organisations that would like to engage with the study to reach out to the Economic Policy Centre, the contact details of which are included in the published terms of reference. It will be an important piece of work for providing evidence-based research that will put me in a position to provide as strong a case as possible to the Treasury as part of the spending review. The British Treasury has indicated that the second stage of the spending review will provide funding for 2026-27 to 2028-29 for resource DEL and a further year for capital DEL. It is anticipated that the outcome of the spending review will be announced in June. There is no doubt that the financial outlook for public services is incredibly difficult, and the increases in National Insurance contributions exacerbate that. I will therefore continue to press the British Treasury for further investment in public services. I support the motion and the amendment. However, as a devolved Administration, our ability to absorb the costs is limited. I will continue to urge the Chief Secretary to the Treasury to ensure that the public sector is fully compensated and to put in place mitigations to support those outside central government who play a key role in delivering our public services.

1,119 words. Text as published by the Northern Ireland Assembly.

Assessment

Not flagged

Jev’s structured answers

Assessed 21 October 2026 at 11:43 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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