Labour's tax hike will cost Stormont £20m for the civil service alone - DUP warn of 'direct and detrimental' impact on public services

Rachel Reeves announced in the autumn budget that employer Class 1 national insurance contributions would rise by over 1% from April next year – and the threshold for the tax has been lowered, also increasing the bill for employers.

DUP MLA Diane Forsythe, vice chair of Stormont’s Finance Committee, said “This decision will have a direct and detrimental impact on public services at a time when budgets are already stretched to breaking point. This tax change, imposed without consultation or consideration of its disproportionate impact on devolved administrations, will force the Civil Service to divert critical resources from frontline services to cover the increased costs.

“Private sector employers will be balancing this increased cost and the Northern Ireland Civil Service will also have to find this funding. It will reduce the funding available to health care, education, and community services. This £20 million could instead have been used to employ more nurses and doctors to support an overburdened health system or to provide additional resources for schools”.

However, unlike private sector businesses, the cost to the public sector is expected to be cushioned.

Roger Pollen, Head of FSB in Northern Ireland said businesses will be watching to see what level of support NI Executive departments and other public sector employers receive from The Treasury. “Some micro businesses will be able to make use of the increased Employers Allowance, but many others will not be shielded and will feel the full burden of this additional increase in the cost of doing business. Stormont Ministers cannot ignore the pressure their constituent businesses are experiencing”, he said.

Mr Pollen said retail, hospitality and leisure businesses “have still not received anything like the levels of support provided to their counterparts in England, and called on the Executive to pass on this support to businesses here, saying it could mean the difference between survival and failure for some.