Devon MP warns National Insurance hike could harm key services

A Devon MP has warned that a planned rise in employer National Insurance (NI) contributions could severely impact essential services across the region. 

South West Devon MP Rebecca Smith has raised concerns over the Labour Government's decision to increase NI by 15 per cent on all salaries exceeding £5,000, which will come into effect in April 2025.

The tax increase is expected to put financial strain on public service providers, including GP surgeries, dentists, community pharmacies, children’s nurseries, care homes, charities, and hospices. 

These services, already operating under tight budgets, will face additional costs that could threaten their viability.

Rebecca has met with representatives from various sectors, including healthcare, social care, and housing associations, who share significant concerns about the impact of the policy.

For example, GP practices could see an extra £20,000 in taxes annually, according to 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.”

Rebecca, alongside over 40 other MPs, has written to the Chancellor, urging the government to reconsider the decision and to exempt key services from the tax increase. 

However, when Rebecca raised the issue during Prime Minister’s Questions, Labour leader Sir Keir Starmer dismissed the concerns, leaving businesses without any assurance of relief.

 Rebecca added: “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.”

Rebecca concluded: “I urge the government to rethink this decision or find the funding to offset the additional taxation so that key services can continue uninterrupted.”