National Insurance and charities are back in the news

Our Director, Will Haydock, reflects on imminent changes in employer National Insurance contributions, the effect on charities and the specific relevance to the treatment and recovery field.

In the autumn Budget, the Government announced increases to employer national insurance contributions.  This had been extensively trailed beforehand, and Collective Voice (and, I’m sure, others) had highlighted some of the potential issues with this in our submission to the consultation the Treasury ran prior to the Budget.  We reiterated and expanded on this after the Budget, when the scale of the challenge – to charities in particular – became clear.

This week there’s been a renewed focus on this issue, at least in the charity sector.  Debra Allcock Tyler, CEO of the Directory of Social Change, has written a piece outlining ‘How to deal with the huge blow of increased employer NI’, subsequently reported on by Civil Society.

She suggests that charities perhaps have a tendency to ‘take what they offer and do our best’ even when we know what’s being asked for is impossible on the funding provided.  Some long-term observers of our field of treatment and recovery services for people with issues with alcohol or other drugs might say they recognise that description, though personally, I think the last 5-10 years have seen a healthier and more realistic approach.

We’re also arguably luckier than some sectors, as the Public Health Grant from central government has been increased for 2025-26, partly it seems as a tacit response to the increased National Insurance pressures.

However, that doesn’t mean we shouldn’t offer reasonable challenge to government and funders.  To be honest, what Debra advocates in her blog is something that seems to have been happening already with providers, commissioners and civil servants across our field: open, factual discussions about what is possible with the funding that is available, given National Insurance changes and wider inflationary pressures on wages and other expenditure.

But I do worry a bit that even with the best intentions, some things might get overlooked.

Debra gives the example of a charity provider explaining to a funder that while they previously used to be able to afford two outreach workers, they’ll now only be able to afford one – and so where they used to reach 50 people a week, this will now be 25.

I’m sure those conversations are happening between substance use community treatment providers and commissioners now, as we approach the deadline for local areas to submit their plans for 2025-26 grants.  Both providers and commissioners should have a good sense of what staff they’re expecting to be delivering the service, the capacity and costs associated with that, and how these will be affected by recent or imminent changes.

I’m a little less confident about the conversations that should be happening regarding other elements of support that aren’t so obviously part of that community-based provider’s services.  This might be another organisation that’s sub-contracted to provide some specialist support – perhaps a lived experience recovery organisation.  But you’d hope those staff would be still be acknowledged on an overall headcount.

It’s more tricky when the conversation is likely to be framed more as the price of a service or intervention , rather than how many staff are involved.  That’s where I think the increased staff costs and other pressures could get overlooked.

If that sounds a bit cryptic, I should spell out that I’m particularly thinking of inpatient detox and residential rehabilitation.  These are heavily staff-led, and those services will be facing the same pressures we can see in community-based provision in terms of staff costs – and perhaps more in relation to wider utilities and essentials.

But those detox or residential services will tend to be either contracted as ‘bed nights’ at a fixed price, or simply wrapped up into the wider overall community contract that the commissioner doesn’t directly manage.

If you can’t directly see the nurse on a budget line, and think about the additional National Insurance cost, I think there’s a risk that these pressures, and those services are to some extent ‘out of sight, out of mind’.

As I say, I’m sure providers, commissioners and civil servants are discussing right now how to use the uplift in the grant, or reprofile spend across their local area.

But are these discussions including all the relevant services?

As I think about this, I’m reflecting on my own experience as a commissioner.  You can’t be aware of everything, and there are various pressures and priorities you’re having to weigh up and respond to.

So echoing Debra’s point, I hope that commissioners, providers and civil servants will be having those frank – and detailed – conversations about cost pressures and sustainability right across the full range of services we need people to have access to.  Otherwise we risk missing essential elements of the system, and not doing the best for the people we’re there to support.

This might involve weighing up different priorities and making difficult decisions, but we should be aware of – and honest about – those challenges, having a good, clear understanding of what’s being done and why.  Good intentions aren’t always a protection against unintended consequences.

As I said at the time of the Budget: the devil will be in the detail, but I’m still hopeful.