Plaid Cymru calls for Welsh public sector employers to be compensated in full for National Insurance hike

The UK Government is being urged to compensate Welsh public sector employers in full to compensate them for the National Insurance hike announced in Wednesday’s Budget.

The Chancellor announced an increase in employer National Insurance contributions which is estimated to cost public sector organisations in Wales between £272 million and £380 million.

The main tax rise in the budget was was the £25.7 billion change to employers’ contributions, although the actual amount of money raised for the Exchequer will be around £16.1 billion by 2029/30 as firms curb wage rises, cut hours and reduce profits while public sector employers get compensation in their budgets for the change.

Plaid Cymru’s spokesperson for Health and Social Care, Mabon ap Gwynfor, has warned that employers such as the Welsh NHS and local authorities are already “under immense financial pressure”.

Health boards across Wales faced a combined deficit of around £183m in 2023-24 alone, while councils face a shortfall of more than half a billion.

It is not yet clear whether Welsh public sector employers will be compensated in full to help cope with the added pressure on their wage bills, or what help with be provided to publicly supported services such as social care, childcare and Welsh Universities.

Mr ap Gwynfor MS said: “In Wales, over 30% of the workforce is employed in the public sector – a higher proportion than the UK average – meaning that this tax hike will place greater pressure on Welsh public sector organisations in particular.

“Despite the anxiousness felt by organisations, we’re yet to hear any clarity from the UK Government whether they will fully compensate the estimated increase of as much as £380m in employers’ national insurance contributions.

“Anything less than full compensation for this increased wage bill could result in less money for front line services in the NHS, local authorities having to strip back on services available to the public, or publicly supported organisations such as Universities having to undertake further redundancies.

“Plaid Cymru is clear: if Labour are serious about delivering the change they promised, they must not continue with the Tories tradition of short-changing Wales and avoid placing further strain on our public sector organisations.”