Impact of National Insurance Increase on Welsh Charities and Council Services

In a significant warning, Tenovus, a prominent Welsh cancer care charity, expressed concern over an impending rise in National Insurance (NI) contributions, estimating the added cost to be a staggering £250,000 per year. This alarming figure was shared in a letter to the Senedd’s Finance Committee, with Tenovus urging both UK and Welsh ministers to reconsider this financial burden or to implement mitigation strategies. Concurrently, the Welsh Local Government Association (WLGA) highlighted a dire future for councils, predicting that the funding gap for 2025-26 could equate to a 26% increase in council tax or a near loss of 14,000 council jobs.

As discussions unfold, various stakeholders, including charities, council leaders, and financial experts, are set to testify on the Welsh government’s draft budget, which currently includes a £600 million annual increase for the NHS amid a broader £1.5 billion allocation for public services. However, despite a £253 million cash boost earmarked for councils, local leaders warned that this amount was drastically insufficient to prevent impending bankruptcy and service cuts.

Tenovus, noted for providing essential services like counseling and nurse-led support at no cost to the NHS, voiced the challenge they face in balancing fair wages amidst a troubling fundraising environment. While UK government assistance for NI increases is anticipated, experts caution that these funds will likely cover only public sector employees, excluding private organizations and charities that support public services.

In another urgent reminder of the strain faced by educational institutions, the WLGA indicated that maintaining current school standards while managing decreasing budgets would necessitate reductions in teaching staff, consequently increasing class sizes. The Welsh Council for Voluntary Action also raised alarms about the future of voluntary groups, which are increasingly expected to support essential frontline services without adequate resources or involvement in decision-making processes.

As Labour ministers pursue a budget deal in the Senedd, they face a challenge due to their lack of majority, necessitating collaboration with other political parties. Plaid Cymru has indicated willingness to discuss additional funding tied to HS2, while the possibility of collaborating with the Welsh Conservatives remains off the table. With a UK government that has ruled out additional funding tied to HS2, Welsh ministers must navigate these financial challenges carefully in the lead-up to the critical March Senedd vote.