GP practices and other healthcare providers could be spared from the upcoming rise in National Insurance contributions (NICs) after a vote in the House of Lords this week.
The amendment to the National Insurance Contributions (Secondary Class 1 Contributions) Bill proposes that specified employers, including NHS GP contractors, should maintain their employer NICs at the existing 13.8% rate rather than facing an increase to 15%, as set out in the 2024 Autumn Budget.
If passed, this exemption would also apply to NHS-commissioned pharmacies, hospices, and charities providing health and care services.
Financial Strain on GP Practices and Healthcare Providers
The tax hike had raised serious concerns across the healthcare sector. The rise in employer NICs, alongside the increase in the National Living Wage (NLW) to £12.21 per hour, was expected to significantly impact GP practices. Experts estimated that many practices would be forced to pay thousands more per year, placing additional financial strain on an already pressured system.
Introducing the amendment, Baroness Barker, a Liberal Democrat peer, warned:
“In the health and social care sector, the sudden imposition of these changes to National Insurance, along with the increases in the minimum wage, are going to threaten the existence of large numbers of providers and have a profound impact on budgets.”
While the Government had previously announced NIC exemptions for some employers, such as NHS hospital trusts, GP practices were initially excluded from these concessions.
Lords Vote in Favour of GP Exemption
On Tuesday, the House of Lords debated the amendment before voting in favour, with 305 peers supporting it and 175 against. The breakdown of votes included:
- 200 Conservative peers and 64 Liberal Democrat peers voting for the amendment
- 159 Labour MPs voting against it
This means the bill will now proceed to its third reading in the House of Lords on 4 March, which will be the final opportunity for further amendments before it returns to the House of Commons for approval.
Potential Impact on GP Practices
If the House of Commons accepts the amendment, GP practices in England could avoid a financial hit estimated at £180-200 million. However, the Government has not yet confirmed whether it will support this exemption in the final version of the bill.
Although the Government recently announced an additional £889 million for GP funding in 2025/26, it did not explicitly address tax increases.
Meanwhile, negotiations between the British Medical Association (BMA) and the Government over the new GP contract have now concluded, with Local Medical Committees (LMCs) set to vote on the proposed terms next month.
What Happens Next?
- 4 March: The House of Lords will hold the bill’s third reading.
- House of Commons Review: MPs will decide whether to accept, reject, or modify the amendment.
- Royal Assent: The bill must pass both Houses of Parliament before it becomes law.
Conclusion
The House of Lords’ decision to support GP practice exemptions from the NIC rise is a crucial step towards easing financial pressures in primary care. However, its final approval now rests with the House of Commons.
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