Employer National Insurance Contributions: Police Forces

Wendy Morton Excerpts

Tuesday 11th February 2025 Westminster Hall

[Esther McVey]

My hon. Friend and neighbouring MP makes a valid point; £3.7 million is the equivalent of about 67 police officers. That is a recurring expense, not a one-off. In places such as Devon and Cornwall, the police will face a £6.3 million tax bill each year. Greater Manchester will be hit with a whopping extra tax bill of £11.9 million each year. Those are just a few examples, and the list goes on.

[Wendy Morton (Aldridge-Brownhills) (Con)]

The estimated cost for the west midlands is in the region of £12.8 million, which is a huge amount of money. What this Government do not seem to understand is that when the pressure of national insurance is put on to businesses, people cannot squeeze and squeeze profit margins; in the end, that will impact employment, training, and so on. When it comes to the public sector, if we keep squeezing and squeezing, the money has to come from somewhere. Does that mean reduced public services—fewer police officers, as in this case—or will the burden come back on the taxpayer?

[Esther McVey]

My right hon. Friend might have hit on a point, as the burden could well come back to the taxpayer. Remember that this is tax—it is money that will be going on tax, and a bill that the Government are imposing. However we look at it, it is money that the frontline police service are being deprived of. Let us consider the financial burden that the changes will place on the police force. Employer national insurance contributions represent a significant cost for everyone, but they will hit the police especially hard. For police forces that employ a number of police officers and staff to protect our communities, the cumulative cost of the increase will run well into the tens of millions of pounds. To put that into perspective, take West Yorkshire, where the figure of £11.2 million per year is the equivalent of 220 police officers. That is potentially 220 fewer police officers keeping our communities safe as a direct result of the Government’s Budget.

Let me name a few other places, such as my home area of Merseyside—[Hon. Members: “Hear, hear!”]—Thank you very much indeed. It will be paying an extra tax bill every year of £7 million, which is roughly 130 police officers. Kent will be paying more than £6 million, which is about 100 police officers a year, and Thames Valley police will face an £8 million tax bill every year.

--- Later in debate ---

[Wendy Morton (Aldridge-Brownhills) (Con)]

It is a pleasure to serve under your chairmanship, Dr Allin-Khan. I am grateful to my right hon. Friend the Member for Tatton (Esther McVey) for securing this important debate. She recently highlighted the significant increase in costs to police forces resulting from the Government’s decision to raise employer national insurance contributions. I begin by expressing my sincere thanks to our local neighbourhood police teams for their dedicated work in supporting citizens and communities across my Aldridge-Brownhills constituency. They protect the public, help tackle crime at the grassroots level, and often go way above and beyond.

Let me turn to the impact of the increased employer national insurance contributions on police forces. Tempting though it is, I will refrain from delving into the decision by the Labour police and crime commissioner to close and sell off the police station in Aldridge. However, I want to make it clear to my constituents that I will continue to stand up for them and for our share of policing resources.

According to HMRC’s impact assessment, the Government’s changes to employer national insurance contributions—I would actually call them choices—will affect approximately 1.2 million employers, which, as we have heard today, includes police authorities. It is my understanding that for the West Midlands specifically, this policy choice—let us remember that that is what it is—will cost a staggering £12.8 million. In my view, that is £12.8 million that should be spent on frontline policing, especially if this Government are genuinely serious about tackling crime. If an average officer’s wage is, say, £35,000, by my calculations that £12.8 million could fund the equivalent of an additional 365 police officers just in one policing authority area alone.

Last week, I raised that issue in the Chamber with the Under-Secretary of State for the Home Department, the hon. Member for Birmingham Yardley (Jess Phillips), particularly because she seemed a little unaware of the cost. I was left unclear about its local impact. I ask the Minister for Policing, Fire and Crime Prevention to confirm whether the funds awarded to police authorities for the upcoming financial year to cover increased national insurance costs will be added to base budgets, or is this a one-off grant? In addition, has the new funding for the 13,000 neighbourhood police officers promised in the Labour party manifesto taken into account the additional burden of national insurance increases from April?

Unlike the constituencies of some of my rural colleagues, my constituency is on the periphery of the west midlands; it is not entirely rural, but it is not exactly urban either. Consequently, we often find ourselves competing for resources with Birmingham and to some extent Walsall. I would be grateful for clarification today on the 13,000 additional officers promised in that Labour party manifesto, with the West Midlands police and crime commissioner saying that they will be funded by a neighbourhood policing grant. Can the Minister confirm how long the Home Office has budgeted for these additional officers, or will individual forces need to precept the ongoing costs? I ask because it is not just this year that we must consider; we must also look to the future.

I will conclude by saying that we need clarity and we need answers. My constituents need reassurance that they will not be left facing the consequences of yet another poorly thought-out Labour policy or broken manifesto promise.

--- Later in debate ---

[Dame Diana Johnson]

As I have just said, the PCC I spoke to last week did not raise any concerns about the financial settlement. Obviously, the PCC and the chief constable use that money in the way that they decide for Cheshire. I have certainly had conversations with the chief constable of Cheshire, and the right hon. Lady is right that I have received a letter from the chief constable that was copied to a number of Members of Parliament in Cheshire.

I accept and recognise that the changes to national insurance contributions will have an impact on public sector budgets, including policing. Although the decision to increase national insurance was made to ensure the sustainability of essential public services, I recognise that the changes create additional cost pressures for police forces. It is useful to note that in 2003, and in 2011 under the coalition Government, there was an increase in employer national insurance to fund the national health service and wider national priorities. So this is not unusual; Governments of both complexions have taken forward changes to national insurance.

It is also worth noting that the changes introduced in the Budget last year broadly return national insurance contributions revenue as a proportion of GDP to the level that they were before the previous Government’s cuts to employee and self-employed national insurance contributions. That sets the context, and this has been done in a way that does not result in higher taxes in people’s payslips.

[Wendy Morton]

When the right hon. Lady says that this change will not impact on employee’s payslips, she completely misses the point: whether in a business or the public sector, we cannot just keep squeezing and squeezing and expect things to continue as they are. If it is a business, we squeeze them out of business—there are no jobs; there will be no pay packet. If we keep squeezing the public sector, there will be no public services.

[Dame Diana Johnson]

With the greatest of respect to the right hon. Lady, who I think was Chief Whip under the disastrous premiership of Liz Truss, I am not really prepared to take lessons on economic stability and how to run the economy from a Government that trashed the economy and that caused such devastation to many families through the rise in interest rates and mortgages. I think perhaps a little humility might be in order.

We have set aside funding to protect the spending power of the public sector, including the NHS, from the direct impacts of the increase in employer national insurance. That is why we are providing compensation of £230.3 million to support forces with the cost of changes to national insurance and to ensure that no force is left out of pocket as a result. The right hon. Member for Tatton may like to know that that is similar to the funding provided by the previous Government in the 2024-25 police funding settlement to cover the additional costs of pension changes. Again, this is not unusual.

The right hon. Lady may have concerns about the £3.7 million pressure reported by her local police force as a result of the changes and the impact that that could have on officer numbers. As set out in the settlement papers, however, we are fully covering those costs. Actually, Cheshire is getting £3.9 million in national insurance compensation for next year—more than the anticipated need. That is alongside the £200 million that we are investing in neighbourhood policing to ensure not only that officer numbers are maintained, but that visible policing in our communities increases. Our mission is clear, and the funding provided in this settlement will ensure that forces across the country are equipped to meet the challenges that they face and to protect our communities.

As I have said a number of times this afternoon, I of course recognise that any additional pressures on forces are concerning. That is why we will continue to engage closely with forces and finance leads to ensure policing has the resources it needs.

I thank the right hon. Member again for securing this debate, and thank all those who have spoken. We are compensating for the national insurance increases to ensure that forces have the resources they need to protect visible neighbourhood policing. Our position could not be clearer. We will work in lockstep with the law enforcement system in our shared effort to keep people safe, whether that involves restoring and protecting the long-standing tradition of British policing, such as neighbourhood policing, or acting to combat the most dangerous emerging threats. This Government are wholly committed to providing the police with the powers, resources and tools that they need to protect the public.