Plan to Assist Charities Facing National Insurance Hike Rejected
A recent proposal aimed at helping charities in Wales cope with the increasing costs of employer national insurance (NI) contributions has been turned down by the Senedd members. The Welsh Conservatives had introduced a motion calling for Welsh charities, not-for-profits, and voluntary organisations to be compensated for the additional expenses. Mark Isherwood, a Conservative MS, criticised the budget presented by UK Chancellor Rachel Reeves as “debt-driving, tax-hiking, and job-destroying” and condemned Labour’s decision to raise NI contributions, describing it as “cruel.” Concerns were raised by the Wales Council for Voluntary Action (WCVA), expressing worries about the impact of NI increases on charitable organizations across the nation.
The motion highlighted the challenges faced by various charitable entities, including the cancer care charity Tenovus, which described the rise in costs as devastating. Adferiad, a mental health and addiction charity, anticipates a yearly rise in expenses amounting to £600,000, potentially leading to service reductions and staff layoffs. Mr. Isherwood also brought attention to the financial dilemmas faced by the 16 charitable hospices in Wales, all experiencing deficits and considering significant budget cuts. These hospices provide crucial care to over 20,000 individuals in Wales affected by terminal and life-limiting illnesses annually, offering substantial cost savings to the NHS.
The Senedd motion urged Welsh ministers to liaise with their UK counterparts to ensure that charities are identified as public sector employers by the Office for National Statistics (ONS) and consequently compensated for NI costs. Plaid Cymru’s shadow finance secretary, Heledd Fychan, argued that the increased costs of employer NI contributions to core public services should be entirely covered by Westminster. The UK treasury plans to use the Barnett formula to determine funding for Wales based on English costs, potentially resulting in budget shortfalls for public bodies. Labour member Lee Waters criticized the Tory motion as “breathtakingly cynical, incoherent, and opportunistic,” questioning how the opposition would secure additional funds for public services.
In response, Jane Hutt from the Welsh Government acknowledged the concerns regarding the impact of NI increases on public bodies that commission services from the third sector. Ms. Hutt, responsible for the voluntary sector in Wales, highlighted that the UK Government had increased the employment allowance to safeguard small businesses and charities. The Welsh Government estimated that the additional NI costs for devolved public sector employers in Wales could reach £253 million.
After a vote, the Senedd members rejected the Tory motion by a margin of 36-14. However, a revised version proposed by Plaid Cymru and the Welsh Government was subsequently agreed upon by the same margin. The rejection of the proposal has sparked discussions about the financial challenges faced by charities and the need for collaborative efforts at both the national and regional levels to mitigate the impact of rising NI costs.
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In this report, we delve into the recent developments surrounding the rejected proposal to support charities facing a National Insurance hike in Wales. The motion, aimed at alleviating the financial burden on charitable organisations, was met with mixed reactions in the Senedd. As the debate continues, the implications of this decision on the charitable sector’s ability to provide essential services remain a focal point of concern.