THE Chancellor is poised to announce a significant increase in National Insurance contributions for employers, aiming to generate £20 billion in additional funding for public services, including the NHS in England.

The Budget, set for Wednesday, will likely feature a lowered threshold for employer contributions to National Insurance, allowing these combined measures to become the largest revenue drivers in the upcoming Budget. However, Chancellor Rachel Reeves is not expected to apply the increase to employers’ pension contributions.

Currently, employers pay 13.8% on earnings over £175 a week. A two-point hike to 15.8% would yield an estimated £18 billion annually, though the threshold adjustment may push that figure higher.

A government source commented: “There is a universal consensus that the NHS needs more money. That means asking businesses to help out. The choice is investment versus decline.”

Tough choices for NHS funding

Speaking at a news conference during the Commonwealth Heads of Government Meeting in Samoa, Prime Minister Sir Keir Starmer remarked that the government is prepared to make “tough decisions” to support the NHS. However, he declined to provide further Budget details.

National Insurance represents the UK’s second-largest revenue stream after income tax, encompassing contributions from employees, the self-employed, and employers. The Chancellor has signaled that while the Labour manifesto promised not to increase National Insurance for “working people,” this was intended to shield employee contributions, not those of employers.

Wider budget implications and business concerns

As Labour prepares for its first Budget in nearly 15 years, concerns are rising about the potential for further tax changes, including a freeze on income tax thresholds, a possible hike in taxes on asset sales, and revisions to inheritance tax.

In a recent International Monetary Fund meeting, Reeves underscored the need for responsible spending, hinting that a return to austerity is off the table. Instead, she emphasized that day-to-day expenses must align with tax receipts, given the current state of critical services like the NHS and prisons.

Yet the potential impact of these changes has sparked concerns among businesses, who argue that a National Insurance hike could dampen job creation and wage growth, ultimately hampering economic expansion. The government, however, maintains that these funds are essential to rescue the NHS, even as critics argue the increase is a “tax on jobs” and breaches the Labour manifesto.

Addressing the housing crisis

In addition to healthcare funding, the Chancellor is expected to unveil a £500 million initiative to build up to 5,000 affordable homes in England, aimed at addressing the national housing crisis. This will be accompanied by a consultation to limit Right to Buy, protecting council housing stock for future generations.

Meanwhile, the Fire Brigades Union has called on Reeves to deliver a Budget that ends what they describe as the “catastrophic austerity era.” In a letter to the Chancellor, Union leader Matt Wrack warned of potential strike action if the Budget does not provide substantial funding, citing severe hardship among firefighters due to prolonged real-term pay cuts.

As Wednesday approaches, Labour faces the task of balancing its commitment to economic growth with the urgent demands of public services. The Conservatives, however, have criticized the impending National Insurance hike, accusing Labour of redefining the term “working people” as the Budget deadline looms.

COUNCIL chiefs warned of “no fat left to cut” with leisure centres and libraries across Wales facing the threat of closure due to “unprecedented” financial constraints.

The Senedd culture committee took evidence from councils on October 24 as part of an inquiry on the impact of cuts on the arts, culture and sport.

Emily Owen, deputy leader of Conwy Council, said: “Everything’s on the table that isn’t statutory at the moment, we’re in that much of a difficult financial situation.”

The Welsh Local Government Association (WLGA), the national voice of Wales’ 22 councils, warned spending on culture, recreation and libraries has fallen by up to 43% over a decade.

Cllr Owen said: “Last year, our economy and culture service had a 20% cut and the year before it had an 11% cut. That’s a serious amount of money that has gone from services.”

With the WGLA warning of a £432m funding gap across Welsh councils, Cllr Owen told the committee the council is trying to avoid closing leisure centres.

“We strongly believe that once they’re gone, they’re gone,” she said.

The Labour councillor cautioned cuts have had a considerable direct impact on participation of the most vulnerable people amid a mental health epidemic.

“It’s really not good,” she said. “If we’re having to remove facilities and access for people to be able to manage their mental health and wellbeing … we are having a really big impact.”

She pointed to plans to turn Venue Cymru in Llandudno into a culture hub, hosting library services, tourist information and welfare benefits advice.

Huw Thomas, leader of Cardiff Council, warned the scale of the budget gap leaves councils little latitude to continue to fund loss-making facilities they are not legally required to provide.

Cllr Thomas, who is culture, arts and leisure spokesperson for the WLGA, told the committee Cardiff is facing a £60m gap in the coming year.

He said: “We’re at the toughest point of budget setting I think we’ve experienced even in 14-15 years of austerity.”

Setting out the scale of the deficit, the Labour councillor told committee members the city’s combined annual budget for parks and libraries totals about £12m.

He said the council felt obliged to move away from a £1m-a-year subsidy for St David’s Hall.

Cllr Thomas cautioned it is increasingly difficult to find savings after 14 years of austerity, adding that councils are overwhelmingly prioritising services in areas of higher poverty.

He made a case for additional funding for Cardiff as the capital, raising the example of other cities in the UK receiving help with policing costs for major events.

Sarah Ecob, head of culture at Conwy Council, said: “We’re fighting really hard to keep our buildings and our services open in a backdrop of extremely severe financial difficulties.”

She expressed concerns about a lack of longer-term investment in facilities, warning: “We still have leisure centres that are desperately, desperately in need of major capital funding.”

Amanda Davies, managing director of Byw’n Iach which runs 12 centres across Gwynedd, cautioned: “There’s no fat left to cut. We’re running on a basis of individual staff running some facilities – you can’t cut back further … it’s not possible.”

Ms Davies raised concerns about a crisis in terms of ageing leisure facilities across Wales, with increasing costs and some centres set to close for maintenance.

Asked about cultural venues, Roland Evans, assistant head of economy at Gwynedd Council, said numbers are yet to return to pre-pandemic levels.

He warned that without the shared prosperity fund (SPF), which replaced EU structural funds, the council would be facing a “cliff edge” with little arts and museums activity.

Ms Ecob echoed this, saying: “The SPF has absolutely rescued us this year.”

She warned core staff are “very much under threat” when the funding comes to an end, which would have knock-on impacts in terms of applying for grants.

Mr Thomas agreed about the importance of the SPF as he similarly raised concerns about uncertainty surrounding funding beyond March 2025.

A CALL for a council director on a community interest company connected to Neyland’s community hub saw Pembrokeshire’s leader label it a question designed to pour criticism on the council’s deputy leader.

The ‘hub’ is home to Neyland’s library, town council offices and bar/restaurant, as well as providing space for a variety of leisure and sports activities.

Councillor Alan Dennison, in a submitted question heard at the October meeting of Pembrokeshire County Council, asked: “The outcome of the Cabinet meeting in September 2019 determined the need for a PCC representative on the board of directors of Neyland Community Interest Company (The Hub).

“This move was in accordance with the terms of the investment agreement between PCC and Neyland CIC, which mandated the presence of a PCC representative on the board of directors. This decision would not only ensure compliance with the agreement but also foster closer collaboration and communication between PCC and Neyland CIC, enhancing transparency and governance.

“The involvement of a PCC representative on the board of directors would provide a valuable channel for PCC to have a direct impact on the strategic direction and decision-making processes of Neyland CIC, ultimately leading to a more harmonious and productive partnership between the two entities.”

His question finished: “Who is PCC’s representative on the board of directors of Neyland CIC?”

Deputy Leader Cllr Paul Miller declared a personal and prejudicial interest, as a director of Neyland CIC, and left the meeting.

Responding, Leader Cllr Jon Harvey said there was no council representative on the board, and no requirement for there to be so.

In a supplementary question, Cllr Dennison said a delay in submitting accounts by the CIC had “highlighted the need for an independent director of the board appointed by Pembrokeshire County Council”.

He added: “Effectively what’s happened is Neyland CIC has been loaned money by the council on a leasehold building, the asset lock has been transferred to a private company, in the name of one councillor and one accountant only; should Neyland CIC go into administration the whole of the asset transfers across to the private company.”

He finished: “The question is, will the leader make immediate arrangements with Neyland CIC to appoint a council-appointed director to represent the interests of Pembrokeshire County Council?”

Cllr Harvey responded, saying the 2019 meeting did not contain a requirement for a council representative.

“I think your question is designed to be critical of a director of Neyland CIC, and we know who that is because he’s left the room. If you have any issues with Neyland CIC I think you should report that to the Section 151 officer.

“I think it’s an absolutely wonderful facility; I don’t see what the issue is. If you can come back with evidence of any wrongdoing please direct it to the Section 151 officer or the head of legal services.”