Welsh Government ‘in the dark’ on £109m NI cash

Cardiff: The Welsh Government is unsure about the £109 million it needs for tax increases in the public sector. A committee meeting revealed this uncertainty.

Jayne Bryant mentioned that the UK Government will provide some funding for public-sector employers. This funding is to help with rising national insurance costs starting in April.

However, the local government secretary said they expect more funding details in late spring. They still don’t know how much Wales will actually receive.

Plaid Cymru’s Siân Gwenllian expressed worries about the tax hikes. She raised these concerns during a discussion about Welsh ministers’ spending plans for 2025/26.

Judith Cole, a finance policy director, stated that the Welsh Government estimates the tax hike cost at £109 million for the public sector.

‘I’d never get out alive’

Ms. Gwenllian asked for clarity on whether the UK Government would provide the £109 million. She noted that the Welsh Local Government Association believed this funding was confirmed.

Ms. Cole responded that discussions are ongoing about the actual funding amount. She joked that she wouldn’t survive if she misled anyone about it.

Ms. Bryant added that they would share information once they have it. In December, finance secretary Mark Drakeford mentioned that Wales would get funding based on spending in England.

‘Entirely dependent’

The former first minister warned that this funding method could be unfair. English public bodies might receive full compensation, while Wales may not get enough.

When asked how funding would be split among councils, Ms. Cole said they might use a standard formula or base it on spending proportions like in England.

She emphasized that other factors must be considered, as some councils provide more services with directly employed staff.

Reg Kilpatrick, a local government director, noted that they depend on negotiations between the finance cabinet secretary and the UK treasury.

Ms. Gwenllian highlighted the tax hikes’ impact on the voluntary sector and outsourced services, which could strain council budgets.

‘Reality’

She shared that some councils reported significant additional costs due to the tax hikes. One council estimated an extra £2 million for internal salaries and £2.5 million for commissioned work.

Another council mentioned £5.4 million for internal costs and £2.8 million for outsourced work. There’s a lot of commissioned work beyond local authorities, and no support has been mentioned.

Conservative Peter Fox agreed, citing Wrexham council’s evidence that 80% of domiciliary care is commissioned. He warned that the public purse would bear the costs.

He stated that if national insurance isn’t fully covered, it could negate the budget increases meant for services.

On January 15, Ms. Bryant confirmed that the UK Government would define public sector workers using the Office for National Statistics criteria.

‘Nothing can be confirmed’

Mr. Kilpatrick added that Mark Drakeford is aware of the issue, which is part of ongoing talks with the UK treasury.

Labour’s Carolyn Thomas raised concerns about the wide range of reserves across Wales, from £6 million to £250 million.

She inquired about a funding floor, noting that provisional funding increases from April vary significantly across regions.

Ms. Bryant mentioned that the government is open to considering a funding floor but nothing is confirmed yet.

In response to calls for a funding formula overhaul, she stated that the complex calculation is reviewed annually.