National Insurance: Employer Contributions

Baroness Humphreys Excerpts

Thursday 9th January 2025 Lords Chamber

Asked by

[Baroness Humphreys]

To ask His Majesty’s Government what assessment they have made of the impact of the changes to employer National Insurance contributions, including the reduction in the per-employee threshold, on town and parish councils in Wales.

[Baroness Humphreys (LD)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and, in so doing, refer your Lordships to my registered interests.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

My Lords, I thank the noble Baroness for her Question. The devolved Governments will receive funding through the Barnett formula in the usual way in 2025-26. The Welsh Government have confirmed that they will use this funding to help local government in meeting increases in national insurance contribution costs. The Government have also announced £515 million of support for local government in England to manage the impact of changes to employer NICs. The Government have no direct role in funding parish and town councils.

[Baroness Humphreys (LD)]

I thank the Minister for that Answer. I welcome the Government’s announcement of the £515 million NICs compensation package as part of the provisional local government finance settlement, but I am disappointed that they have confirmed that compensation to local government bodies will not extend to town, community and parish councils. Could she explain why it is fair that some elected bodies are given financial support and others are not?

[Baroness Taylor of Stevenage (Lab)]

As I explained, the Government have no responsibility for funding town and parish councils. The Welsh Government’s budget is growing in real terms in 2025-26. In fact, the settlement is the largest in real terms for any Welsh Government since devolution. Currently, the Welsh Government also receive an additional 5% transitional factor as part of the Barnett formula, while they are funded above their independently assessed relative need compared to England to 115%. If they wish to provide further support to town and parish councils, they are able to do so.