What assessment has the Cabinet Secretary made of whether the UK Government policy to increase employer national insurance contributions is increasing unemployment by making it more expensive for businesses and others to employ people and to create jobs?
National Insurance (NI) is solely reserved to the UK Government.
That said, as part of the package of changes to employer NICs introduced by the Chancellor, the employment allowance (the amount available to businesses in which employer NI is not payable) was increased by £5,000 (equivalent to a 90 per cent increase). This means employers will now get a £10,500 discount on their NICs bill - a change that particularly benefits smaller businesses. A statement from the Secretary of State for Wales outlines how this change “allows Welsh firms to employ four National Living Wage workers full time without paying employer national insurance on their wages”.
The Office for Budgetary Responsibility (OBR), the UK Government’s official economic and fiscal watchdog, stated in its October 2024 Economic and Fiscal Outlook Report that the majority of UK businesses will be no worse off following the changes announced within the Budget on Employer NICs.
Estimates from HMRC suggest that, from April 2025, a total of 1.2 million employers will be affected (with 250,000 benefiting from the changes). However, together with the 820,000 employers which will experience no change, around 53% of employers will be better, or at least no worse off, following the changes to Employer NICs.