Local Government: Employers' Contributions
The question
To ask the Secretary of State for Housing, Communities and Local Government, pursuant to the Answer of 30 January 2025 to Question 25793 on Local Government: Employers' Contribution, what methodology her Department used to determine that £515 million of additional support would be required.
Answered by Jim McMahon
Additional funding for employer NICs has been determined based on a national assessment of the costs for directly employed staff. The grant distribution methodology has been published in an explanatory note on the government website: https://www.gov.uk/government/publications/updated-explanatory-note-on-the-employer-national-insurance-contribution-grant-2025-to-2026.
We recognise the challenges that local authorities are facing as demand increases for critical services. That is why the government is providing an additional £2 billion of grant funding through the Settlement, which includes £502 million of additional grant funding to manage the impact of employer National Insurance Contributions changes on council budgets, and £13 million for combined authorities, totalling £515 million. The final Settlement for 2025-26 makes available over £69 billion for local government, which is a 6.8% cash terms increase in councils’ Core Spending Power on 2024-25.
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