First Minister criticised over national insurance hike uncertainty

The leader of the Welsh Conservatives has criticised the First Minister following comments she made about uncertainty regarding funds to cover increased employer national insurance contributions from next year.

In October’s budget Chancellor Rachel Reeves announced changes which will see the current rate of 13.8% paid on employees’ earnings, above a threshold of £9,100 a year, increase to 15% in April 2025, with the threshold reduced to £5,000.

In addition, the employment allowance – which allows companies to reduce their NI liability – will increase from £5,000 to £10,500.

Funding

The UK government has confirmed it will provide funding to the public sector to cover the cost of the National Insurance increase for central government departments, public corporations, and local government, with details to be confirmed at a future date.

In an interview given by the First Minister on BBC Radio Wales Breakfast on Thursday morning, Eluned Morgan admitted that she would not be aware of the UK Government’s level of cost coverage for the rise until May or June of next year – after the increase has come into force in April.

She admitted it was a difficult situation, adding “…it’s not within our gift to determine when they give us this money”.

When pressed on whether the delay was acceptable, she replied: “It’s not easy. It’s not the first time we’ve tried to manage this. Just at the end of last year, a whole slug of money came in at the very last moment after we’d had to make some significant cuts. So, we’re not unused to this.

“Is it a good system though? It’s ridiculous system, but that’s the system that we have to work with”.

‘Unacceptable’

Responding to the First Minister’s comments, Darren Millar, the newly elected leader of the Welsh Conservatives, said: “This situation is completely unacceptable; councils and other public sector organisations need certainty now to deliver vital frontline services for the people of Wales.

“After failing repeatedly to be honest about the cost of Labour’s jobs tax, the First Minister has confirmed seven months of limbo for public services here in Wales.

“Instead of making excuses for Keir Starmer’s UK Labour Government, Eluned Morgan needs to demand that the costs incurred be completely covered for the Welsh public sector and the services they commission. Clarity must be provided immediately, not in seven months’ time.”