National Insurance 'tax raid' poised to cost key services, warns Plymouth MP

A Devon MP has voiced concerns over the Government’s budget decision to raise employer National Insurance (NI) contributions. Rebecca Smith, the MP for South West Devon, has called the move a National Insurance 'tax raid' and says it will cost key services.

The tax increase, set to take effect next April, will require employers to contribute an additional 15% in NI in all salaries exceeding £5,000.

In a statement, Rebecca said the change will "impact financially vulnerable services not limited to GP surgeries, dentists, community pharmacies, children’s nurseries, care homes, charities and hospices".

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Rebecca said she has received complaints and met with representatives from multiple sectors across South West Devon, including healthcare, social care and housing associations.

Her statement said: "The consensus is that businesses share significant concerns, particularly about new financial pressures, given that they are already operating under tight budgets. For GP practices, this policy shift alone could result in an additional £20,000 in taxes per practice annually, according to estimates from the Institute of General Practice Management."

Rebecca said: “Public service providers who operate as small businesses are staring down the barrel of an even heavier tax burden, which could ultimately lead to job losses or reduced services in an already stretched primary care system, at a time of year – winter – when services need to be working at their best.”

More than 40 MPs, including Rebecca, have written to the Chancellor urging the government to reconsider the decision. The letter asks that key services are exempt.

Rebecca said that, during Prime Minister’s Questions, Kier Starmer "refused to acknowledge" the impact, with the threshold remaining the same.

Rebecca said: “It’s disappointing to hear the Prime Minister dismiss the potential consequences of the NI hike, despite the outpour of concern from local service providers. While Labour may have developed a budget plan to win voters, they’ve seemingly overlooked the real-world impact on essential community practices.’’

“The Chancellor’s announcement of a £22bn cash boost for the NHS sounded promising, but in the cold light of day, fails to account for the damaging impact that an unbudgeted employer National Insurance hike will impose on essential service providers. I urge the government to rethink this decision or find the funding to offset the additional taxation so that key services can continue uninterrupted.”