Mark Drakeford MS, Cabinet Secretary for Finance and Welsh Language
Today, I set out the Welsh Government's approach to supporting devolved public sector employers facing increased employer National Insurance contributions (NICs).
The UK Government has provided £185m in funding to Wales following its decision to increase employer NICs in the autumn UK Budget. However, this falls significantly short of the £257m devolved public sector employers in Wales need to meet the increased NICs costs they face.
This shortfall, of more than £70m, is a result of the UK Government decision that Wales should receive a Barnett consequential of the additional costs to devolved public sector employers in England, rather than the actual costs.
The £185m will be passed on in full to devolved public sector employers in Wales. I will also provide an additional £36m from the Wales Reserve. This creates a total package of £220 million to support our public services, including further education, with increased NICs costs.
The Welsh Government faces significant financial challenges and drawing down £36m from our limited reserves reduces our ability to respond to other emerging pressures throughout the year. However, we have concluded that providing additional support for essential public services is necessary to minimise the impact on Welsh citizens who rely on these services.
Setting the rate of employer NICs is a reserved matter and the responsibility of the UK Government. We will continue to press the UK Government for full funding of the costs associated with the NICs increase.