Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 23
23
Accepted
Compensate councils fully for additional costs from increased employer National Insurance Contributions
Recommendation
The Government must fully compensate councils for the additional costs arising from the increase to employer National Insurance Contributions. (Recommendation, Paragraph 82)
Government response summary AI-generated
The Government did not commit to fully compensating councils for increased NICs, instead detailing over £5 billion in new grant funding, a 2.6% real terms increase in Core Spending Power, and planned funding reforms from 2026-27, alongside new Mayoral fiscal powers.
Summary of the government's response below — read the verbatim text to verify.
Government Response
Accepted
HM Government · verbatim extract
Accepted
40. At autumn Budget 2024, the Government set aside funding to support the public sector with the additional cost of employer National Insurance Contributions (NICs). The total support funding for the whole of the public sector amounted to £4.7 billion in 2025–26, inclusive of Barnett consequentials (the Barnett formula was applied in the normal way to changes in UK Government department budgets). This funding was based on an estimate of the proportion of employer NICs receipts paid by public sector organisations, using the Office for National Statistics’ classification of the public sector boundary. This approach to estimating the cost of similar measures for public sector organisations is in line with the approach taken under the previous government. The total £4.7 billion support funding in 2025–26 (including Barnett consequentials) was allocated to departments and other public sector employers at Main Estimates 2025–26 based on each employer’s total share of headcount, wage and salary costs.
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