ALLIANCE member survey highlights third sector fears on employer National Insurance Contributions

A survey of ALLIANCE members found significant concerns regarding financial stability, service provision, and employees.

A snapshot survey of Health and Social Care Alliance Scotland (the ALLIANCE) membership has found serious concerns about the impacts of proposed increases to employer National Insurance Contributions (NICs). As part of the budget announced in October, the Chancellor set out her plans to increase employer NICs from 13.8% to 15.0%. Data from the Scottish Council for Voluntary Organisations (SCVO) estimates that this will cost third sector organisations in Scotland £75 million next year.

The ALLIANCE have previously joined third sector organisations across the UK to highlight the serious risks this decision entails, including through signing a joint letter to the Chancellor led by NCVO and ACEVO. In late November, we ran a short survey aimed at our organisational members, seeking their views on increased NICs.

Of those responding, 85% said they were concerned about the additional NICs costs. When asked to think about the impacts on a range of areas:

• 62% said they thought they would have to cut back services, with 22% saying this would affect them a lot,
• 82% said their financial stability would be impacted, 34% saying a lot,
• 44% worried that they would have to cut employee salaries, with half that number saying a lot,
• 58% felt they may have to reduce their number of employees, with 14% saying by a lot,
• and 71% believed it would impact on their ability to recruit and retain employees, with 29% saying this would impact them a lot.

However, only a minority of respondents (29%) said they were concerned they may have to withdraw from public service delivery. Meanwhile 17% said they weren’t sure whether they would have to cease operations, alongside 3% who feared they would, reflecting a significant degree of uncertainty within the third sector.

Amongst the comments submitted by members, many explicitly called for third sector organisations to be made exempt from the increase. For example one respondent said this, noting as well that the third sector is already struggling to compete with other sectors for staff:

“Relief for third sector / charitable organisations would greatly help us. We are already well behind comparable private and public sector salaries when benchmarking similar roles across organisations.”

Another suggested that additional costs should be added to the grants from public sector funders going forward:

“For all funders, whether it is the local authority, HSCP, NHS or independent grant funders, to add this additional cost onto our budgets going forward. This should be passed from them to us via government additional funding or the alternative would be for charities to be exempt from paying this additional National Insurance.”

The ALLIANCE have also written to all 57 Scottish MPs, asking them to show their support for the third sector by calling on the UK Government to commit to fully reimbursing third sector organisations for the additional NICs costs. You can read our letter to MPs via the link below.

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