National Insurance changes ‘major misstep’, warn MPs

19 Jun 2025

The Public Accounts Committee (PAC) has warned that the April employers’ National Insurance rise and the threshold reduction is imposing ‘indirect costs to councils’ upwards of £1bn

The criticism came in a PAC report into financial stability at local councils, which said that the Treasury and Ministry of Housing, Communities and Local Government (MHCLG) failed to carry out an assessment of how National Insurance (NI) increases would impact local government.

The PAC, chaired by Sir Geoffery Clifton-Brown MP, has accused the government of ‘unacceptably’ failing to assess how the changes would impact councils financially when council were already struggling. Six councils have declared themselves effectively bankrupt since 2021, with many more on the brink of following suit.

Now, the committee is calling for a review of the impact, demanding a reply from the government.