Local Government Services: Employers' Contributions
The question
To ask the Secretary of State for Housing, Communities and Local Government, what assessment her Department has made of the potential impact of the increase of employers National Insurance contributions on (a) commissioned and (b) externally provided council services.
Answered by Jim McMahon
We recognise the pressures local authorities are under as demand for vital services grows. Government is providing £2 billion of additional grant funding through the Settlement, including £502 million to manage the impact of employer National Insurance Contribution changes on council budgets, and £13 million for combined authorities, totalling £515 million.
Payments to councils will be unringfenced to give local authorities discretion over the use of funds in their area. This funding can be used to support councils to mitigate the additional costs of employer National Insurance Contributions within direct, commissioned, and externally provided local services, for example.
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.
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