Commons Sense

House of Commons · Ministers' Questions

NICs Increase: Impact on Economic Growth

Tuesday 4 March 2025 · 4 questions

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Answered 0 Partly answered 4 Not answered 0

Key points

  • Government increased employer national insurance contributions to restore stability to public finances.
  • Businesses in the hospitality sector are struggling with rising costs due to the increase in national insurance contributions.
  • Care providers report that they will have to refuse new care packages due to the financial pressures from national insurance contribution changes.

Topics (select to filter)

Questions & Answers

Q1 Monica Harding Lib Dem Esher and Walton
Economy Taxation Employment
Context

The increase in employer national insurance contributions is causing financial strain for local businesses.

Question

My constituent Alison runs Stepping Stones nursery school, which has been operating in my constituency for 30 years, offering wraparound care to busy families. The increase in employers’ national insurance contributions alone will cost it £16,000 a year and it is still struggling with an increase in utility costs, while other nurseries in the area are also struggling and, indeed, closing. Headmasters, a hairdresser in Walton, is struggling with £15,000 of extra costs, owing primarily to this tax rise. Can the Minister explain to businesses in Esher and Walton how the Government’s national insurance policy will deliver growth or higher living standards, given that it seems to be doing neither?

Answer from James Murray (Exchequer Secretary to the Treasury)

The Government’s decision to increase employer national insurance contributions was one of the toughest decisions that we took at the Budget, but it was necessary to restore stability to the public finances. It is only on the basis of having stable public finances and fiscal responsibility that we can boost the investment and growth that will make people across Britain better off.

Partly answered

Not addressed: The Minister did not address how the specific businesses mentioned in the question would benefit from economic growth despite their current struggles.

How: We Are Committed To Boosting The Economy

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Q2 Munira Wilson Lib Dem Twickenham
Economy Employment Business & Trade
Context

The hospitality sector is struggling with increased costs and uncertainty.

Question

As the poor growth figures show, the Chancellor’s jobs tax is really hurting businesses, not least in our hospitality sector. In my constituency, pubs such as the Eel Pie and the King’s Head, as well as the family-run restaurant Shambles, are really struggling with soaring costs and putting off hiring people. If the Chancellor will not reverse her jobs tax, will she at the very least consider extending the current 75% business rates relief for hospitality until the new system that she has announced is in place?

Answer from James Murray (Exchequer Secretary to the Treasury)

The hon. Member speaks about business rates relief. We have to remember that the business rates relief for retail, hospitality and leisure was due to end entirely in April 2025 under the plans we inherited from the Conservative party. Despite the toughest of contexts, we decided to extend the 40% relief for another year before the permanently lower rates for retail, hospitality and leisure come in from April 2026.

Partly answered

Not addressed: The Minister did not address extending the current 75% business rates relief specifically requested by the questioner.

How: We Have Already Extended The Relief

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Q3 Daisy Cooper Lib Dem St Albans
Social Care Economy Taxation
Context

Social care providers are facing financial pressures due to increased national insurance contributions.

Question

Health and wealth are two sides of the same coin, and we will not get economic growth without a healthy population. But as a result of the national insurance contribution changes, the Care Provider Alliance reports that 73% of social care providers will have to refuse new care packages from local authorities or the NHS, and that 57% will have to hand back existing contracts. What assurances can the Government provide to the huge number of people who are very scared that they will have to go without care and see their lives deteriorate?

Answer from James Murray (Exchequer Secretary to the Treasury)

The hon. Lady makes an important point, but it is also important to point out that tough decisions on taxation must be made to fund the very services she is keen to support. On her specific point about these pressures, we announced at the provisional local government settlement a further £200 million for adult and children’s social care to support authorities in delivering key services. This will be allocated through the social care grant, which will bring the total increase in this grant in 2025-26 to £880 million, meaning that up to £3.7 billion of additional funding will be provided to social care authorities in 2025-26.

Partly answered

Not addressed: The Minister did not provide specific assurances regarding the impacts on individuals and providers as requested by the questioner.

How: We Have Announced Additional Funding

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Q4 James Murray Labour (Co-op) Easington
Economy
Context

The hospitality, retail, beauty and service sectors are concerned that the combination of national insurance changes will negatively impact their businesses. There is worry about shop closures affecting economic growth and confidence.

Question

If high street shops start to close, that is bad for economic growth and bad for confidence. What mechanisms will Ministers put in place to monitor the impact of the national insurance contributions changes on the vibrancy and resilience of our high streets?

Answer from The Minister for Exchequer and Financial Management (James Murray)

All measures in the Budget were analysed by the Treasury and the Office for Budget Responsibility ahead of their announcement, and we keep in constant contact with industry representatives to see how policies are working in practice. I draw her attention to my earlier remarks about our business rates reform which is a vital ask from the retail, hospitality and leisure sector. We are introducing permanently lower rates for the retail, hospitality and leisure sector from April 2026, avoiding the complete end of relief that the Conservative party left when we arrived in office.

Partly answered

Not addressed: Mechanisms to monitor national insurance contributions impact on high streets were not specifically addressed.

How: Changed Subject, Referenced Other Policy

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