General practice left ‘fighting for funding it deserves’ as employer costs rise under Budget

The chancellor announced a £22.6bn funding boost for the NHS over two years, including £100m ‘earmarked’ for 200 GP estates upgrades in the Autumn Budget delivered yesterday.

However, an increase in the National Insurance (NI) rate paid by employers from 13.8% to 15%, effective from April 2025, will have a ‘significant’ impact on costs for GP practices, experts have warned.

In her first Budget, Rachel Reeves set out plans to ‘fix the NHS’ with extra funding to deliver Labour’s manifesto promise to create an extra 40,000 elective appointments each week.

Practices will benefit from a ‘dedicated fund’ of £100m that will deliver around 200 upgrades to GP surgeries across England, enabling practices to provide more patient appointments by improving the use of existing space.

And secondary care will receive around £1.5bn of capital funding for ‘new surgical hubs, diagnostic scanners and new beds’ to help create more space in emergency departments and reduce waiting times.

The money is part of the Government’s commitment to provide ‘record levels of capital investment for health’ with an increase of £3.1bn in 2025/26, which will then rise to £13.6bn.

However, the chancellor’s decision to hike up employer costs by raising NI rates at the same time as reducing the threshold at which employers become liable to pay NI on each employee’s salary – from £9,100 per year to £5,000 per year – will add to the financial pressures faced by practices, warned the Association of Independent Specialist Medical Accountants (AISMA).

Andy Pow, AISMA board member, said the NI rate rise means an employee earning £30,000 a year will cost the practice an additional £866.

And the change to the threshold means practices will have to pay employer NI contributions for more employees. ‘Where previously a practice would not need to pay employer National Insurance contributions for an employee earning £9,100, it will now have to pay £615,’ he said.

Although the Government has given greater protection from additional costs to small businesses via the Employment Allowance, Mr Pow said this is support that GP practices and other primary care providers are not eligible to claim.

‘Unless the rules for this change, practices will be faced with the full cost uplift,’ he warned.

The chancellor also announced that the National Living Wage will increase from £11.44 to £12.21 an hour from April 2025, a 6.7% increase.

Mr Pow said while that was good for employees, it further exacerbates the issue of how practices fund their staff, since pay differentials between different staff grades will need to be maintained.

‘This could mean another year of above inflation cost increases for practices,’ he explained, adding that ‘the staff cost modelling used by NHS England for the global sum uplift confirmed in August is out of date so this needs to be looked at very carefully.’

Ms Reeves made no changes to pension taxation, as had been widely feared, which Alec Collie, head of medical at Wesleyan, said was ‘welcome news’.

‘After so many revisions to the NHS Pension Scheme, more changes could have rocked confidence in this very popular and well-regarded benefit and put medics off joining or staying in the scheme’, he said.

Overall, the BMA described the Budget as a ‘promising start’ but said it showed ‘scant regard for GPs and their patients’.

Professor Philip Banfield, BMA council chair, said: ‘What is glaringly absent from today’s Budget is a concrete plan to rebuild general practice. GPs are the front door of the NHS, and we asked the Government to increase their funding by at least £40 per patient per year – just 11p per day.

‘Instead, the increase in employment costs will squeeze GP practices even further. We need to see immediate reassurance from the Government that it will provide additional funding to general practice to cover these costs.’

Tony Brown, a former practice manager and now chief operating officer at North Shields PCN Collaboration said ‘it seems that, yet again, general practice will have to fight for the funding it deserves after today’s National Insurance announcement’.

He added: ‘It took so long to get a contract uplift that hardly scratched the surface due to previous under investment. This is just a kick in the teeth and will yet again impact patient services.’