The cost of Labour’s National Insurance hike revealed
Bristol’s Liberal Democrat councillors have been highlighting the impact of the Labour Government’s decision to increase employer’s National Insurance (NI) contributions to the council.
The group tabled a council motion outlining the burden that the council will incur for the staff it employs directly, which is estimated to be £6.6m for the forthcoming year. The increase in NI comes after the council had to set a budget that accounted for a £52m black hole in its finances.
The motion posits that public services should be insulated from Labour’s increase to employer’s NI contributions and that the Government is jeopardising front-line services across the country by failing to fully compensate local authorities for the increased costs on their workforce.
What is harder to estimate, however, is the effect of the increase on the companies that the council contracts with.
Asking about this in a council meeting, Cllr Caroline Gooch (Liberal Democrat, Westbury-on-Trym and Henleaze) said “What is the best estimate of the financial impact on the council and service users of the Labour Government’s decision to increase employers’ National Insurance contributions without mitigation for services commissioned by the council, such as personal care and leisure centres?”
The written response read: “The impact of the cost increase on directly employed staff by Bristol City Council from NIC changes is a budgeted £6.56 million pressure. The ‘protection’ funding in the local government settlement includes a £4.15 million contribution to this, leaving a shortfall of £2.41 million.
“Other pressures are more difficult to assess. The burden of NI changes, alongside increases in the National Minimum/Living Wage rates upon care providers present real challenges through the cost of delivery. The council’s 2025/26 budget includes a provision of £9.3m for ASC provider inflation that is intended to support the sector with these challenges. The allocation of this will be discussed in the ASC Policy Committee in March. We will be carefully monitoring the impact of changes on service providers and the public. There is no financial impact on the council across its main leisure contracts.”
Speaking to the response in the meeting, Cllr Gooch said “We need to understand the impact on our outsourced children services, contracted building services, road works, street cleansing, so on and so forth – every single service that we as a council buy-in, we will be paying more because of the National Insurance contribution rise for employers. It’s a stealth tax. Will we be able to get a figure for what this is actually costing us and what we need to find?”
Replying to the supplementary question, the Leader of the Council said that the final impact on the contracts the council procures will only be revealed once the council enters negotiations for new deals.
Notes to editors:
- The motion titled “Increase to Employer’s NI Contributions” can be found in the papers for the meeting of Full Council on 11th March: ModernGov - bristol.gov.uk
- The question titled “LIB DEM. QUESTION 2” can be found in the papers for the meeting of Member Forum on 11th March: ModernGov - bristol.gov.uk