Front-line Services: Employers’ National Insurance Increase

Private Members' Business – in the Northern Ireland Assembly at 5:15 pm on 13 January 2025.

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Photo of Steve Aiken Steve Aiken UUP 5:15, 13 January 2025

The next item of business is a motion on protecting front-line services from the increase in employers' National Insurance.

Photo of Diane Forsythe Diane Forsythe DUP

I beg to move

That this Assembly recognises the need to protect businesses and community and voluntary sector organisations that provide vital front-line services in Northern Ireland from the destructive impact of the increase in employers’ National Insurance contributions; notes concerns voiced by general practitioners, dentists, care homes and a range of other independent providers that this extra cost could lead to job losses, jeopardise the future of some services and create additional hardship for the most vulnerable in society; further notes the rising pressures facing Departments, local councils and the Northern Ireland Civil Service as a result of the Government’s decision; calls on the Minister of Finance to work with Executive colleagues to ascertain the total additional cost of increased employers' National Insurance contributions for the public sector, including independent providers; and further calls on the Minister to lobby the Chancellor of the Exchequer for the funding required to meet this shortfall in full, protect jobs and incomes and place the delivery of front-line public services on a stable footing.

Photo of Steve Aiken Steve Aiken UUP 5:30, 13 January 2025

The Business Committee has agreed to allow up to one hour and 30 minutes for the debate. The proposer of the motion will have 10 minutes in which to propose and 10 minutes in which to make a winding-up speech. As an amendment has been selected and is published on the Marshalled List, the Business Committee has agreed that 15 minutes will be added to the time for the debate. Diane, please open the debate on the motion.

Photo of Diane Forsythe Diane Forsythe DUP

Thank you, Mr Deputy Speaker. I move the motion with huge concern for what is about to hit us on 1 April 2025. Since the Labour Government came to power over our United Kingdom last year, they have acted unpredictably and with incredible detriment to so many of us. First, it was their shocking removal of the winter fuel payments, seriously hurting some of the most vulnerable in our society. Then, in the autumn statement, it was the unexpected announcement of the increase in employers' National Insurance contribution, imposing a hugely destructive impact on employers, their businesses, our public services and our voluntary and community sector. The fact that both of those significant decisions were not in the Labour election manifesto and were not consulted on is disgraceful.

We tabled the motion to call on all in the Northern Ireland Assembly to recognise the huge impact and the need for us, as elected representatives, to take steps to protect our businesses, public services and community and voluntary sector. We know that the Labour Budget has caused increased anxiety for many of our small business owners and their staff, who make our high streets and town centres thrive. They provide essential services to the most vulnerable and are at the cutting edge of manufacturing and food production in all our communities. It is alarming that, following the Budget announcement, the Office for Budget Responsibility downgraded its projections for growth in real household incomes. It warned that employers are likely to pass on the higher tax to employees, there will be lower nominal wages and labour supply will be impacted by a reduction in employment and a reduction in hours for those who stay in work. The impact will be far-reaching throughout our society, with lower wages and higher prices. Many businesses are considering redundancies and pausing their growth plans on the back of that announcement. It is incredibly detrimental to our economy and our workers, who may be paid less or even be out of work.

Small businesses are the lifeblood of our economy in Northern Ireland, and we want to see them grow. However, this Budget will see an increase in the employers' National Insurance contribution and a decrease in the threshold at which businesses start making those contributions. Combining those factors with an increase to the national minimum and living wage will result in a rising cost of doing business, and that leaves many of us feeling as though we are being taxed to death.

Hospitality Ulster in particular has warned that trying to balance the books from the pockets of high street businesses will simply leave hospitality as collateral damage, threatening jobs, future investment, price increases for consumers and business viability. We have seen reports, recently, of investments being on hold due to the rise in National Insurance contributions. We also have the impact of the increased costs being passed to consumers, which businesses will need to do to remain profitable. However, with the cost-of-living crisis, the public do not have the disposable income to be able to pay those increased prices for goods and services.

The childcare sector is one that has been prevalent. Childcare is widely accepted as critical economic infrastructure and is a key priority of the Executive. A sector that is already under pressure sees the increases to employers' National Insurance contributions leading to a number of settings considering closure, and, again, if they remain open, they will need to pass on the additional cost to the public, which will see childcare costs increase further when it is already unaffordable to many. That is a real risk, with many businesses facing a cliff edge on 1 April 2025.

We need to protect our local businesses and local economy, including our childcare sector, and we also need to highlight the risk that this increase by the Labour Government will have for our public services in Northern Ireland. Through a series of Assembly questions for written answer, I have identified some of the increases in the cost of the National Insurance contributions across different Departments and their arm's-length bodies. I will give you a flavour of those. For Infrastructure, it is an additional £9 million; Justice, an additional £10 million; DAERA, an additional £0·8 million; the Department for the Economy, an additional £6·8 million; Communities, £2 million; Health, some £100 million; and Education, through the Education Authority's employer National Insurance contribution, an additional £51 million. I also note the health service businesses, such as GP practices, dentists and community pharmacies, which will face increases but do not operate in a business environment in which they can pass increased costs on to the end consumer. They are expected to continue to provide the same high-quality health services with significantly higher overheads.

Most local councils are looking at an increase in the region of £1 million, which will be passed on to ratepayers without any intervention. That is huge. In Northern Ireland, we are already under significant financial pressure. Our DUP leader, Gavin Robinson MP, has long led the fight to achieve a fair funding model for Northern Ireland. Whilst we have made progress, we are not there yet. Facing increases of tens of millions of pounds in employers' National Insurance contributions from April will have a destructive impact on our public services. We simply do not have the money to fund that. I ask the Finance Minister to, please, seek clarity urgently on the total additional cost to Northern Ireland and on how much of that will be provided by the Treasury and the Labour Government who imposed this extra cost of employment on our public sector. It was widely reported recently that, in Scotland, only three fifths of the additional costs will be funded by Treasury. That falls well short. We need to know where we stand in Northern Ireland.

I also take the opportunity to highlight, once again in the Chamber, the incredible contribution of our voluntary and community sector to the delivery of front-line public services in Northern Ireland. On government-funded contracts, supplemented by fundraising, they deliver critical services to the public across all of our Departments. They will all be subject to this substantial increase to employers' National Insurance contributions, but have been advised that there will be no subsequent increase to their funding from Departments to cover it. There will inevitably need to be a reduction in service provision under the existing funded projects as the costs of employing staff go up. The impact of reducing service provision is a reduction in our front-line public services. That is of huge concern.

I have previously made the point that the Executive need to identify the full scale and reach of public services and public-sector outcomes that are delivered by our voluntary and community sector. The failure to do so has, I believe, exposed us to a much bigger risk than is fully realised. The voluntary and community sector groups provide direct health services, including mental health support, to thousands of people across Northern Ireland, with direct referrals from the Department of Health and GPs into the sector. A recent Northern Ireland Council for Voluntary Action (NICVA) survey, which had responses from 68 organisations representing a breadth of organisations in size and scale across the voluntary and community sector in Northern Ireland, showed that 76% of them expected major financial impacts, with many facing additional annual costs of between £5,000 and £200,000 from April 2025. One social care provider anticipates annual costs of up to half a million pounds. The reduction in the capacity of our voluntary and community sector will have devastating effects on our healthcare system and wider public services.

I wish to specifically mention the impact on organisations that support victims of domestic and sexual abuse in Northern Ireland. Those organisations will have the additional cost of tens of thousands of pounds per regional body imposed upon them. That will reduce the capacity of Women's Aid, Nexus and others to support services at a time when the Executive are prioritising ending violence against women and girls and of high levels of murders of women in Northern Ireland. Northern Ireland is one of the most dangerous places in Europe for a woman to live, and we cannot afford to see those services reduced.

The increase in employers' National Insurance contributions from 1 April, which has been imposed on us, will be of huge significance; it is a cliff edge, and we need action. I ask the SDLP to reach out to its sister party, Labour, for any intervention that may be possible, but, in keeping with what the motion is asking for, it is imperative that the Minister of Finance works with Executive colleagues to:

"ascertain the total additional cost of increased employers' National Insurance contributions for the public sector, including independent providers" and the voluntary and community sector. We also ask the Minister:

"to lobby the Chancellor of the Exchequer for the funding required to meet this shortfall in full, protect jobs and incomes and place the delivery of front-line public services on a stable footing."

I commend the motion to the House.

Photo of Eóin Tennyson Eóin Tennyson Alliance

I beg to move the following amendment:

Leave out all after "public sector," and insert: "independent providers and community and voluntary sector organisations providing front-line services; and further calls on the Minister to lobby the Chancellor of the Exchequer for the funding required to meet this shortfall in full, protect jobs and incomes and place the delivery of front-line public services on a stable footing"

Photo of Steve Aiken Steve Aiken UUP

You have 10 minutes to propose and five minutes to make a winding-up speech. All other Members who wish to speak will have five minutes.

Photo of Eóin Tennyson Eóin Tennyson Alliance

Thank you, Deputy Speaker. You may be relieved to know that I do not intend to take the full 10 minutes to propose the amendment.

During the last general election campaign, Alliance warned of the real and pressing challenges that the UK's public finances faced after 14 years of Conservative rule. We also, however, set out credible and progressive solutions that focused on ensuring that those with the broadest shoulders would bear the greatest burden and on promoting economic growth. Sadly, it appears that the new Labour Government have largely ignored those calls. Instead, they are pursuing a regressive tax on employment, cutting the winter fuel payment and breaking promises that were made to women against state pension inequality (WASPI).

The hike in employers' National Insurance contributions will create obvious and enormous pressures on not only businesses and the community and voluntary sector but the Executive at a time when our finances and public services are under strain. Some of the estimated additional costs to individual Departments have already been read into the record by Diane Forsythe. I will not repeat what Diane said, but I echo her call for the Finance Minister to provide some more clarity in her winding-up speech on the implications for the whole Executive, given that the Scottish Government have already set out their assessment.

Despite the obvious complications and implications, it is clear that no meaningful consultation took place with the Executive or any other devolved Administration, nor with business or third-sector organisations. Whilst the Chancellor has confirmed her intention to provide relief to public-sector employers, she has not committed to covering the costs in full. Instead, we will receive a Barnett consequential based on the funding that is provided to Whitehall Departments. That approach is obviously flawed, given that Northern Ireland's public sector is proportionately larger than that in other parts of the UK. It means that, in effect, Northern Ireland's public services will be funding a tax increase for the rest of the UK.

There also has been no commitment to provide support for the community and voluntary sector that provides vital front-line public services on behalf of the Government. As mentioned, vital organisations like Women's Aid and Nexus are key to the Executive's strategy to end violence against women and girls. Mental health charities are key to delivering our ambitions on mental health and childcare providers are key to the Executive's ambitions to deliver universal and affordable childcare. The change will create a bizarre two-tier system whereby those third-sector organisations that deliver vital services on behalf of Government are hit harder than those in the public sector itself. That is against the backdrop of the enormous challenges that those organisations have already faced in recent years, including the loss of EU funds through Brexit and the recent UK Government decision to reduce shared prosperity funding.

The picture is also bleak for independent providers. GPs and community pharmacists have warned of the potential for the changes to create a further disparity between funding for primary and secondary care. Those fears were echoed by the Health Minister when he stated that he did not anticipate any additional funding being made available to support family practitioners and the independent sector. It is clear that, in failing to properly mitigate those cost pressures, we will hamper service delivery, jeopardise the reform agenda and cap our ambitions to move towards a preventative and community-based model of care in our health service.

At Westminster, my colleague Sorcha Eastwood MP has tabled amendments on behalf of Alliance that seek to protect vital services. Our proposals would exempt care homes, domiciliary care providers, GP and dental surgeries, pharmacists, health and social care charities and community organisations from Labour's proposed National Insurance increase. However, the UK Government must go further and properly compensate the Executive for all the costs that are incurred. I welcome the motion in that we have an opportunity to send a clear and united message from the Assembly to the Government that Northern Ireland's public services and its community and voluntary sector should not bear the brunt of the tax hike. On that basis, I urge Members to support the motion and our amendment.

Photo of Deirdre Hargey Deirdre Hargey Sinn Féin

I am in favour of the motion. Increased National Insurance contributions will put an additional strain on our local businesses, our public-sector employers and, critically, our community and voluntary sector, as has already been stated, especially at a time when they are already struggling with rises in inflation, the cost of living and decades of British Government underinvestment and austerity.

In addition, we know that our community and voluntary sector has already faced massive funding cuts as a result of the British Government's Shared Prosperity Fund (SPF). That is funding that many groups and communities rely on. The knock-on effect that the increase in employers' National Insurance contributions will have on already stretched front-line services is deeply concerning. I know that the Finance Minister has raised the issue consistently and spoken about the fact that it will compound the issues that are already there as a result of a stretched budget.

GPs, dentists and care workers — to name but a few of those affected — have all spoken out to warn against the damaging effects on their ability to provide the much-needed services that our public here rely on and to highlight the fact that there is no appropriate mitigation forthcoming from the Chancellor. We have heard about the impact that the increase will have on areas such as childcare and tackling violence against women and girls and on people with disabilities, particularly those who rely on direct employment and support to address their social care needs.

Photo of Ciara Ferguson Ciara Ferguson Sinn Féin

Does the Member agree that the budgetary changes that the British Government have made will exacerbate an already incredibly challenging situation in our housing sector, particularly for the 80 Supporting People organisations that provide vital services for over 20,000 vulnerable people across the North to ensure that they can remain in their home and live independently?

Photo of Steve Aiken Steve Aiken UUP

The Member has an extra minute.

Photo of Deirdre Hargey Deirdre Hargey Sinn Féin

Thank you.

That further demonstrates the fallacy that this is being done to protect public services; in fact, it is continuing to erode public services and increase inequality in our society here.

The motion calls on the Minister:

"to lobby the Chancellor of the Exchequer".

I know that Minister Archibald has already engaged on the issues with the Chancellor, as well as with the Chief Secretary to the Treasury and the Minister of State for Housing, Communities and Local Government. Thankfully, the Minister of Finance recognises the issue, and she has been working hard to mitigate yet another British Government assault on our front-line services.

The motion also calls on the Minister:

"to ascertain the total additional cost of increased employers' National Insurance contributions".

Indeed, we are aware that she has already moved to commission the Ulster University Economic Policy Centre (UUEPC) to conduct a cost-of-doing-business sectoral study that will look at the issue and at other factors that are having an impact, such as insurance costs, energy costs and the rise in property costs. I look forward to seeing the result of that detailed study.

The increase is just the latest move by the British Government over decades to attack our public services and front-line services, particularly here in the North, as was stated. It shows that, although we may have different faces in the British Government, the policies are the same. I trust that all parties will join forces today and unite against the policy and, indeed, any austerity measures that may be forthcoming. We must work collectively to press for further investment in our public services, which is an issue that the Finance Minister raises consistently. I commend and support the motion.

Photo of Diana Armstrong Diana Armstrong UUP

I thank the proposer of the motion. Like others, I support it. The motion highlights the urgent need to protect businesses and community and voluntary sector organisations that provide vital front-line services across Northern Ireland from the disastrous impact of the increase in employers' National Insurance contributions. Many businesses are still struggling to process what that means for their long-term sustainability and for the future retention of employees. There is no doubt that a range of really important sectors will be adversely impacted on by the changes. That is particularly the case for sectors that have independent providers with large workforces, such as domiciliary care and the childcare sector, which was mentioned. They are often dependent on public funding but do not have the same certainties and guarantees, such as day-to-day operational costs.

I will focus on public-sector employees. His Majesty's Treasury said at the time of the Budget that it would work with the public sector to support it with additional costs. It is assumed that recurrent funding will be received for 2025-26 to cover the costs. The Treasury has said that it is compensating public-sector employers for employers' National Insurance contributions bills through increases to their budgets, but there is a big difference between who is eligible and who really should be eligible. I would welcome clarity from the Finance Minister on the question of compensation for the public sector. For instance, healthcare providers will be greatly affected by the rise in employers' National Insurance contributions. Amongst those are general dental practitioners, GPs, community pharmacies, care homes and hospices, all of which have voiced major concerns about the impact that the increases will have on them. As public contractors, any business that undertakes more than 50% public work is ineligible for employment allowance.

As has been highlighted by other Members, the additional costs imposed by the increase in National Insurance contributions threaten the long-term sustainability of many vital front-line services. Those were the very services that stepped up to the mark during the COVID pandemic, and, at the time, that underlined how much society depends on those services. Is it right, now, that those services should face threats to their sustainability? It is surely incumbent on the Labour Government to recognise the role of vital front-line services and to protect them where possible.

As it stands, the providers of some of our most important services, such as those that I have mentioned, face a great deal of uncertainty. Therefore, there needs to be absolute clarity on the definition of "public sector" adopted by HM Treasury. I will, of course, support the motion and the amendment. However, I call on the Minister of Finance to seek assurances from His Majesty's Treasury about the definition of "public sector", in order to ensure that those front-line services are protected from Labour's disastrous autumn Budget.

Photo of Matthew O'Toole Matthew O'Toole Social Democratic and Labour Party

I am happy to speak to the motion, which we will support. Like others in the Assembly, we recognise the negative and damaging impact that the increase in employer National Insurance contributions will have on our public sector and on those bits of the community and voluntary sector and private sector that help to deliver public services. That will have a deleterious, knock-on impact across a range of front-line services. It is really important that where we, as the Opposition, can add our voice constructively to an Executive approach to the UK Government, we do that. That is what we will do today. It is clear that it would be better if the additional costs were not being lumped on to our public sector and, indeed, to our community and voluntary sector. It is particularly important to say that, in the areas, for example, of general practice or in social or domiciliary care, where we know that, given the debates that we have had today and the state of our health service, it is vital that those areas of service are primed and ready to take the burden off acute care, particularly in our emergency departments but in hospitals more generally, and that those areas are well staffed and operating as they need to be and are able to do what the Health Minister keeps referring to as the "shift left". It is a particular concern for those services, and I share that concern.

More broadly, however, the fact that we are having the debate is in itself slightly frustrating and a bit sterile, if I am honest. This is a devolved Chamber. I completely agree with the thrust of the motion — I would rather that we were not facing those additional costs — but, ultimately, people send us to the Assembly, and the Assembly elects an Executive in order to use its power to effect meaningful change for people's lives here. It is slightly ironic that we have heard from the opposition party — the party opposite, I should say; we are the Opposition party — and, indeed, from the other main governing party about their frustrations around the limitations of the power that they have. Let us go back to why the UK Government are doing this in the first place: it is in part because the UK is a smaller and weaker economy than it used to be. That is the blunt truth: Brexit has weakened the UK economy. We had a decade and a half of austerity that ground down public services and reduced deficits on the backs of the poorest people and to the cost of public services. What is happening now is that a new Government have come in, with a weakened economy, and have made the decision not to invest in those services.

I find it ironic that the DUP has tabled the motion, having championed Brexit. They have no particular interest in looking to a new future in which we can make more of these decisions ourselves on this island. I personally think that that would be a much preferable outcome. To be honest, much of what we say today will not change the employers' National Insurance picture. I wish it were otherwise, but let us be honest with ourselves about that. I strongly support the call that we should lobby, and the Finance Minister should, of course, make those representations, because imposing extra costs on our public sector is not the way for the UK Government to proceed. We strongly oppose it, we wish that it had not been imposed, and we are deeply frustrated with some of the content of the Budget. Let us be honest, however: unless we choose at some point to do things differently ourselves here, we will keep being faced with decisions that have a deleterious impact on our public services. We will keep being faced with choices that we did not make and cannot fundamentally change or reshape.

By all means, let us lobby the UK Government to give clarity on what additional support they will give and lobby them hard to meet the additional costs of this. We fully support that, and we will support the motion and the amendment. However, let us also be honest about the long-term limitations of our current arrangements and how, in the very long term, we will not be able to effect fundamental change without more fundamental change in our arrangements.

Photo of Paul Frew Paul Frew DUP

Will the Member give way?

Photo of Matthew O'Toole Matthew O'Toole Social Democratic and Labour Party

I have little time. I am happy to give way, if I am allowed.

Photo of Paul Frew Paul Frew DUP

Will the Member agree that maybe he is in a position to lobby his sister party at Westminster to change this?

Photo of Steve Aiken Steve Aiken UUP

The Member has an extra minute.

Photo of Matthew O'Toole Matthew O'Toole Social Democratic and Labour Party

Will you give me an extra minute to respond?

Photo of Steve Aiken Steve Aiken UUP

You get an extra minute from this Deputy Speaker.

Photo of Matthew O'Toole Matthew O'Toole Social Democratic and Labour Party

Being a sister party in the Party of European Socialists in no way binds me to agreeing with decisions made by the British Government. My party is not in a confidence-and-supply arrangement like yours was. That went really well for the DUP; you really were able to undo austerity.

My party, like all the other parties here, will vote for the motion and agrees that raising employer NICs is the wrong decision and the wrong way to go by the Labour Government. The point that I made was that, unless we are fundamentally honest about the limitations of our current arrangements under the devolved settlement and, ultimately, in terms of where decisions are made, we will never be able to effect fundamental structural change.

Those are the only points that I wanted to make. We will support the motion and the amendment.

Photo of Phillip Brett Phillip Brett DUP

It was hoped by some that, with the election of a Labour Government, things could only get better. We were told that that Government would deliver a Budget that would be about growth and investing in the long-term future of the United Kingdom. Despite their whopping majority, they have presided over cuts and chaos.

The first target was our pensioners across the United Kingdom, including Northern Ireland, whom they stripped of their entitlement to a universal winter fuel allowance. They next targeted our farmers by proposing the most fundamental reform to family farm inheritance anywhere in western Europe in a generation. Now they are targeting small businesses and hard-pressed family budgets across the United Kingdom, which is worrying for us in Northern Ireland. Their record of delivery as a Government has made this place seem like a panacea and makes the record of Ministers here at Stormont get an A+.

I am extremely concerned at the effect that the changes will have on our economy. I make these remarks as DUP spokesperson on the economy and not as Chair of the Committee for the Economy. Small businesses are the backbone of our economy. Official records show that 90% of businesses in Northern Ireland are small businesses. Their turnover is less than £100,000 in 60% of cases, and, for every full-time employee, the additional cost to them will be £2,500. Frankly, for many businesses that is unsustainable. What that will do and what we have already seen in the media and in conversations that I and, I am sure, other Members have had is that those businesses will slow down expansion opportunities, reduce the number of hours that they offer to workers and limit new job opportunities into the future.

The Labour Government's Budget is anti-growth and anti-competitive in trying to get Northern Ireland's economy back on the right footing. That is why this party has taken immediate action on issues that that Budget inflicted upon the people of Northern Ireland. Our Communities Minister has come forward to deliver £100 for those families that were impacted on by the cut to the winter fuel allowance. Our Education Minister today announced that the childcare subsidy scheme will continue next year. The childcare sector in Northern Ireland estimates that the extra cost of the National Insurance contribution changes for some of its providers next year will be £18,500. However, that subsidy scheme will ensure that millions of pounds are put back in that sector's pockets.

However, we need strong action from our other Departments. To date, the Department of Finance has been unable to tell us how much those changes will impact on budgets right across Northern Ireland and the public sector. We are now weeks and weeks and months and months after the announcement, and not having those figures makes the case for change even more difficult. The Department for the Economy had its budget set just before Christmas. There is not a single proposal or mitigation package for the businesses right across Northern Ireland that will be impacted on by the changes. I understand that the Minister for the Economy's focus may be on seeking election to other places rather than on protecting the economy here in Northern Ireland, but my focus and that of my party is on protecting the economy. We need to see the Executive collectively coming together, but that means that other Ministers now need to step up to the mark.

In the brief time that I have left, I want to make clear the impact that the increase will have on our universities. Our two universities estimate that the impact on them will be £5 million of extra cost each year. Their income is already dropping, and this measure will see discretionary spend being lowered. That is on issues such as maintenance support for those who are on low incomes and widening participation bursaries. Again, the most vulnerable will lose out on the support that they need and deserve.

One of my other hobby horses, the Northern Ireland Hospice, has estimated that the cost to it will be £3 million. That is simply unaffordable, but we now need the evidence to go to the Executive. I call on the Minister to try to get those figures and facts together as quickly as possible so that the House can speak with one voice.

I commend the leader of the Opposition for attempting to defend his sister party's actions, but the policy was more like something that Vicky Pollard would say — "Yes, but no, but yes, but no".

[Laughter.]

Photo of Timothy Gaston Timothy Gaston Traditional Unionist Voice 6:00, 13 January 2025

Members, it is important to remember that National Insurance is only part of the tax burden to fall upon employers. It is shocking that the Labour Government have chosen to reduce the threshold to £5,000, meaning that the vast majority of people with a part-time job will end up with their employer now paying 15% National Insurance. That will result in question marks over the viability of many jobs. The hospitality sector in my constituency, which is a sector that already runs on relatively small margins and employs a lot of part-time people, will fall victim to a double whammy: the increase in the living wage, plus employers now having to pay National Insurance. Many businesses in North Antrim are small. They employ 10 people or fewer but have a vision to expand and grow. The changes will mean that many of them simply will not be able to afford to do so.

As I understand it, the Government are offsetting the National Insurance rise in relation to the public sector. That said, following a question for written answer in the Commons, my party leader obtained information that suggests that the higher level of employment in the public sector in Northern Ireland, which is 26·8% as opposed to 17·3% across the UK, will not be recognised. Therefore, we face being short-changed in another issue that is developing in the budgetary pressures that bedevil this place.

Importantly, I believe that the change will result in Northern Ireland once again being funded below the level of need. Since the UK Government adopted that definition, funding for Northern Ireland has fallen below the definition of need not once but twice in five years. I also note that there is no suggestion of the Government offsetting the cost of National Insurance in relation to agency staff, who, as Members will know, do a Trojan amount of work and without whom our health and social care service would simply collapse.

Photo of Eóin Tennyson Eóin Tennyson Alliance

I thank the Member for giving way. Part of the reason why the UK's public finances are in such a difficult climate is low growth and low productivity. Given that fact, surely the Member recognises the importance of the UK's returning to the single market to boost trade and boost headroom for investment in public services?

Photo of Steve Aiken Steve Aiken UUP

The Member has an extra minute.

Photo of Timothy Gaston Timothy Gaston Traditional Unionist Voice

I thank the Member — I think — for his intervention. I would certainly rather that Northern Ireland were released from the shackles of the Northern Ireland protocol —.

Photo of Eóin Tennyson Eóin Tennyson Alliance

So that people would be poorer.

Photo of Eóin Tennyson Eóin Tennyson Alliance

People would be poorer.

Photo of Timothy Gaston Timothy Gaston Traditional Unionist Voice

People would be poorer? No. It would allow our businesses to flourish and take advantage of Brexit. Northern Ireland did not get Brexit, but, once again, the Alliance Party is still in denial.

I will finish my remarks by saying that the changes mean that the sector will struggle even more than it does currently. That is another reason why I support the motion. Agency workers in Northern Ireland are the backbone of our industry. If the Government do not stand over helping to offset the cost of National Insurance increases, rather than foisting the increases on agency workers and public services, I despair. I look to the Finance Minister to see what work she has done to date and what figures she will produce for Members this evening on the issue.

Photo of Steve Aiken Steve Aiken UUP

Minister, you have up to 15 minutes. Happy new year to you.

Photo of Caoimhe Archibald Caoimhe Archibald Sinn Féin

Go raibh maith agat, a Leas-Cheann Comhairle

[Translation: Thank you, Mr Deputy Speaker]

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.

Photo of Steve Aiken Steve Aiken UUP

Thank you, Minister. I call Kellie Armstrong to make a winding-up speech on the amendment. You have five minutes, Kellie.

Photo of Kellie Armstrong Kellie Armstrong Alliance

Thank you, Mr Deputy Speaker. I will try my best to be quicker than that.

Today, we must all think about why the Chancellor, Rachel Reeves, brought these changes forward in her Budget. Certainly, she believes that raising £24 billion to fund public services will add funds to a stretched health service. That makes sense, until you consider the fact that the money being raised is coming from employers, including, as others have confirmed, front-line deliverers of public services: our GPs, dentists, social care providers, pharmacies, education system, Infrastructure, Justice, DAERA, councils and the community and voluntary sector. Those services cannot pass increased costs on to customers. As others have said, SMEs — small to medium-sized enterprises — which make up most of the non-public sector here and provide a significant number of jobs across Northern Ireland, will not be able to pass costs on to customers either, because we are still in a difficult cost-of-living situation. Their customers are the public in which Labour say that they are trying to increase investment in order to provide public services.

The impact on employers — all employers — could mean that they freeze wages; evaluate and alter long-term strategic planning, including decisions on recruitment; delay business expansion; and reduce the operational delivery of services. None of that would be good news for Northern Ireland.

The community and voluntary sector will be one of the hardest hit. Grant or contract income, especially from Health, has been restricted for some time. When the sector has been wrung out, there is nothing left to squeeze. The losers will ultimately be those who need domiciliary care and addiction services; domestic abuse survivors; children with learning disabilities, such as autism; and many of the services that help to keep people out of hospital. There is no point in raising funds for the health service if we will not be able to deliver the front-line services that citizens across Northern Ireland need.

Although the Labour Government's approach is aimed at employers, it will have a negative impact on local people. We, in the Assembly, do not have the capacity to compensate for decisions that are made on reserved taxation matters, as the Minister of Finance highlighted. The Alliance amendment adds a specific requirement for the independent and community and voluntary sectors to be included in the call to the Chancellor to meet the shortfall that was created by her Budget on 30 October, which will cause such difficulty for front-line service deliverers that depend on public funding to deliver vital public services.

As my colleague Eóin Tennyson outlined, Northern Ireland will be funding a tax hike by Westminster out of the public purse. We will be robbing Peter to pay Rachel. If support to meet additional costs is not found, we must be honest with the public about the potential reduction to public services. To that end, I ask the Minister of Finance to ensure that she publish all responses from the Chancellor and the Treasury, confirming what support is coming, and, if no additional support is coming, to ensure that all Departments confirm what the additional National Insurance costs will mean to their delivery of public services and the services that are delivered by those in receipt of grants and contracts. I ask all who can to support Sorcha Eastwood MP's amendment in Westminster to extend the exemption to all independent public service delivery agents, such as GPs, dentists, pharmacists and the community and voluntary sector. As Diana Armstrong said, we need to see a change in the HM Treasury definition of "public sector".

I thank all who have spoken with one voice today to send a clear message from the House to the Chancellor: stop breaking Northern Ireland. Please support the motion and the amendment.

Photo of Steve Aiken Steve Aiken UUP 6:15, 13 January 2025

I call Paul Frew. Paul, you have up to 10 minutes.

Photo of Paul Frew Paul Frew DUP

Thank you very much, Mr Deputy Speaker.

First of all, I applaud and welcome the one voice that has been shown here today. Despite the leader of the Opposition's defeatist attitude, I think that we are all aware of the damage that the tax raid will do to every sector and every business in this country. Every one of them will be a victim of that atrocious play. We all lamented the fact that the previous Government were incompetent, did not do detail very well and did not understand the problems that they created. Labour promised so much more. In fact, Labour promised that there would be no tax hikes in certain elements. However, the way in which they have gone about trying to raise revenue is, in many ways, sneaky. They have tried to do it through the back door, but it will hurt every person. No matter whether you are an employer or an employee in the public sector or the private sector, you will be hurt. Most businesses that produce something will have no choice other than to put the burden of that cost on to their product. It does not matter what it is. Who pays for that product? The consumer, the housewife, the house husband — all of us; we pay.

It will raise inflation. That is one of the big no-nos that the Government should have been trying to avoid. It will also lead to low growth. When there is low growth, you are talking about recession, which will impact on jobs and wealth. No one — no one — is going to avoid that damage. It will affect every single one of us who lives in Northern Ireland. Whilst it is true that the small businesses that produce something will be able to put the costs — no matter how much they loathe doing so — onto their product, there are so many people in Northern Ireland who produce a service. Many of those people will not be able to hike the cost of that service because they provide it to the public sector. Therefore, we will feel that when we lose GP surgeries, dental surgeries, care homes and hospices. It will affect the most vulnerable. Everyone will be affected, but the most vulnerable will be affected more.

The Minister raised the issue of councils, which was something that had not really struck me. I think that the Minister said that councils' costs will be a burden of around £12 million. Who pays for that? The ratepayers. No matter what way you look at this, while we have all been told about trickle-down economics, this is trickle-down torture from a Labour Government whose first act as the Government has been to attack labour. It is to attack the workers. That is how stark and how blatant it is, and they must know what they are doing. You do not really go far into a degree in economics before you hit everything that I have just said.

Photo of Matthew O'Toole Matthew O'Toole Social Democratic and Labour Party

I appreciate the Member's giving way. I do not share all of his analysis — I do not come from exactly the same place as him politically or economically — but, given what he is saying, the two alternatives are greater fiscal powers for the Northern Ireland Executive, which I do not think that he wants, or, perhaps, an entirely new constitutional settlement. There is a jurisdiction just down the road that is in a much better fiscal position and is not having to impose new charges. Would he like to select from either of those choices? I invite him to pick one.

Photo of Paul Frew Paul Frew DUP

I thank the Member for his intervention. Again, it is his sister party that has done this blatant damage. His politics are the same as the Labour Party's, yet they are going to do this to our people. The Member scares me every time he raises the spectre of fiscal powers for this place because I am not sure that we have enough maturity to be able to tackle some of the issues that Westminster and global factors have in play when it comes to the attack on our people. Therefore, I worry about incompetence, not only in Westminster but in other global markets and democracies around the world.

Many people have blamed many things for the place that the British economy is in, but not one Member has mentioned the price and the cost of lockdown philosophy and how mountains of money were pumped out as part of that philosophy that should not have been and would not have been required if we had tackled things in a different way. We have to pay for that somehow. In fact, the Labour Party has to pay for that somehow. This is the manifestation of what we experienced through lockdown philosophy, but not one of the parties here will admit to that. Why? Because they were zealots when it came to lockdown philosophy. We can all blame the big bad Tories and we can all blame the big bad Labour Party, but we also have to look at the measures that this place implemented. It was OK then because the money was flowing in from Westminster Government. We were giving it out like Smarties, but it was not Smarties; it was taxpayers' money. In fact, it was not even that: it was debt. We have to pay that back somehow. We all need to have a look at the part that we have played in the past four or five years.

There is no doubt about the Budget move and this sneaky way of raising revenue. Other agencies and business groups have poured cold water on the Budget that Labour has produced. The Institute for Fiscal Studies has already poured cold water on the Labour Government's claim that the levy from increased employers' National Insurance contributions will lead to anything close to raising £24 billion to £25 billion. How much money will it raise? A figure does not really come into it whenever we know that the Government will not necessarily spend the money wisely. Even if the levy did raise £24 billion to £25 billion, can we be assured that it will be spent wisely? What we do know, however, is the impact that the increase will have on employers, employees, small businesses and places that provide a service outwith government, such as GP surgeries, dental surgeries, care homes, hospices and charitable groups. Charitable groups do the work that government cannot do, because government does not have the ability to do it. Charitable groups, however, do it at the coalface and at the tip of the spear. Those services will disappear.

Every single person who loses their job will impact on the service that charities provide, and, in turn, that will lead to job losses in the sector, because organisations cannot cost their way out of it. They cannot put a new price on the service that they provide. They do not produce a product that they can hike up the price of. They provide a service on behalf of government. A lot of that service is contracted already, and they will not be able to change the contract. We are therefore in dire straits, and the increase will affect every single person in Northern Ireland, as I said. Rich and poor will be affected to some degree, but for the most vulnerable, who need to see a GP or get dental care, because not doing so will lead to more complications for them down the line, who need home help or who need hospice care, the service will not be there. Those people — our loved ones — will be affected most by this Labour Government.

Photo of Steve Aiken Steve Aiken UUP

Thank you, ladies and gentlemen, for the debate.

Question, That the amendment be made, put and agreed to.

Main Question, as amended, put and agreed to.

Resolved:

That this Assembly recognises the need to protect businesses and community and voluntary sector organisations that provide vital front-line services in Northern Ireland from the destructive impact of the increase in employers' National Insurance contributions; notes concerns voiced by general practitioners, dentists, care homes and a range of other independent providers that this extra cost could lead to job losses, jeopardise the future of some services and create additional hardship for the most vulnerable in society; further notes the rising pressures facing Departments, local councils and the Northern Ireland Civil Service as a result of the Government’s decision; calls on the Minister of Finance to work with Executive colleagues to ascertain the total additional cost of increased employers' National Insurance contributions for the public sector, independent providers and community and voluntary sector organisations providing front-line services; and further calls on the Minister to lobby the Chancellor of the Exchequer for the funding required to meet this shortfall in full, protect jobs and incomes and place the delivery of front-line public services on a stable footing.

Adjourned at 6.27 pm.