Kensington and Chelsea Council is set to investigate the potential impact of upcoming changes to National Insurance contributions (NICs), which are estimated to cost the council £535,000 directly and £2.4 million indirectly through external contracts. These costs will need to be absorbed within the existing budget. The investigation follows a motion passed at a Full Council meeting.
The motion, put forward by Councillor Preety Hudd and seconded by Councillor Greg Hammond, addresses concerns arising from the Labour Government's announcement of a 1.2% increase to employer's NICs from April 2025. This increase is coupled with a reduction in the threshold employers pay NICs on each employee's salary, dropping from £9,100 to £5,000 a year.
The council's motion highlights the Office for Budget Responsibility (OBR) estimates, suggesting this could lead to an average annual tax increase exceeding £800 per employee. Councillors voiced fears that employers might offset these costs by reducing wages or raising prices. The motion also raised concerns about the potential impact on public services and private contractors procured by the council, such as GPs and care homes.
To address these concerns, the council has requested that Councillor Johnny Thalassites, Lead Member for Finance, Customer Services & Net Zero Council, conduct a thorough investigation into the implications of the NICs changes. He is also tasked with preparing a written submission to the government outlining the anticipated impacts. Councillors Kasim Ali, Janet Evans, Eva Jedut, Cem Kemahli, David Lindsay, Sof McVeigh, Lloyd North, Josh Rendall, Dori Schmetterling, and Claire Simmons all contributed to the debate before the motion was carried.
