Senedd debate highlights impact of National Insurance increases

The impact rising Employers National Insurance Contributions will have on voluntary organisations has been highlighted again in a recent Senedd debate – but action is still needed.

The voluntary sector is facing a financial storm. Employers National Insurance Contributions (NICs) are set to rise from 13.8% to 15% in April 2025, alongside a significant reduction in the threshold at which employers start paying from £9,100 to £5,000. Charities, voluntary organisations, and not-for-profits delivering public services are bracing for increased costs at a time when budgets are already stretched to breaking point. These combined changes mean many organisations will face considerably higher employment costs, putting essential services at risk.

WCVA is hearing directly from voluntary organisations across Wales about the scale of this challenge. Our latest sector insights reveal that 84% of voluntary organisations in Wales are concerned about financial sustainability, and 69% say they are already using reserves. Many are struggling to keep up with demand for their services, and the rising cost of employment is only making matters worse. For some, this could mean reducing their workforce, limiting service provision, or, in the worst cases, closing entirely. Initial indicators are showing a worrying increase in enquiries and need for support for these kinds of issues.

This growing concern was the focus of a recent Senedd debate. The Welsh Conservatives tabled a motion calling for the Welsh Government to urge the UK Government to reimburse voluntary organisations delivering public services, just as it plans to do for public sector bodies. While the motion was ultimately rejected, the debate brought much-needed attention to the pressures facing the sector. An amended motion recognising the financial challenges facing voluntary organisations and committing the Welsh Government to further engagement with the UK Government on the issue, passed with the support of Welsh Labour and Plaid Cymru.

WCVA CONTINUES TO PUSH FOR ACTION

As the national membership body for voluntary organisations in Wales, WCVA is working closely with the sector to ensure its voice is heard. We know the impact of these changes is not just theoretical – it affects real people, real communities, and the invaluable services so many rely on. Many of our members deliver vital services in partnership with public bodies, yet face escalating costs without the same financial protections as their statutory counterparts.

Although National Insurance remains a non-devolved issue, WCVA has been actively engaging with both the UK and Welsh Governments to seek a fairer approach. We have urged decision-makers to ensure voluntary organisations are included in any reimbursement schemes, recognising their critical role in delivering essential services to communities across Wales.

During the debate, Members of the Senedd acknowledged the strain on the sector and the need for support. The passing of the amended motion is a small positive step, reinforcing the need for further engagement at the UK level. However, it is disappointing that Welsh Government will not be making a direct call for voluntary organisations delivering public services to be reimbursed for the increase in Employer NICs. We need to see practical solutions that prevent organisations from having to make impossible choices between reducing services and compromising their financial sustainability by depleting their reserves completely to absorb higher costs.

WHAT’S NEXT?

WCVA remains committed to standing up for the voluntary sector. In the coming weeks, we will continue working closely with sector representatives and decision-makers to push for meaningful financial support. We’ve seen a good amount of coverage on the issue in the media and we will also continue to highlight the realities of the sector’s financial position and the increasing pressure voluntary organisations are under. 

We encourage all voluntary organisations affected by these changes to share their experiences with us. The more evidence we have, the stronger our case when engaging with policymakers. If your organisation will be affected by the Employer National Insurance increase, we want to hear from you. By working together, we can amplify the sector’s voice and ensure its vital contribution to Welsh communities is not overlooked. Share your thoughts with us at policy@wcva.cymru.

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