PCNs have been advised to be cautious with their spending and ensure they have reserves in place in case the full cost of the National Insurance hike is not met by increased budgets next year.
Accountants have warned that networks will face ‘significant challenges’ due to the changes announced in the Budget at the end of October.
Chancellor Rachel Reeves said that the rate of employer National Insurance Contributions (NICs) will increase by 1.2 percentage points – to 15% – from 6 April next year. The threshold at which employers become liable to pay NI on each employee’s salary will also be reduced from £9,100 per year to £5,000 per year.
While funding has been set aside to protect the public sector, GPs are not included in this as they operate as independent businesses.
Andy Pow, board member of the Association of Independent Specialist Medical Accountants (AISMA) said: ‘The reduction in the threshold means PCNs will have to pay more employer National Insurance contributions for all employees. This means an employee earning £30,000 a year will cost the PCN an additional £866.’
He added that this NIC increase comes on top of ‘below inflation uplifts to the ARRS budgets allocated to PCNs in 2024/25’, which also contribute to the challenges facing PCNs.
He advised: ‘PCNs would be wise to be cautious with their ARRS spending and ensure they have some reserves in place in the event that the full cost increase of employing staff is not met by improved budgets in 2025/26.’
Clinical director at Central and West Warrington PCN, Dr Laura Mount, said her PCN may have to look at reducing services if budgets are not uplifted to cover the additional costs.
‘We were due to announce our pay increases for this year but based on the budget we have had to pause this and revisit what we can give,’ she said.
‘If the maximum reimbursable rates and the overall ARRS budget does not increase significantly for next year we will have to look at a reduction in service provision across the PCN,’ Dr Mount warned.
‘For example not replacing roles when people leave and cutting back on some of the proactive care we offer.’
Calculations by the Institute of General Practice Managers (IGPM) found that the NI rises would incur additional costs of around £2 per patient, or approximately £20,000 a year for the average practice.
Earlier this week, the Liberal Democrats released it’s own analysis based on the IGPM’s figure, which showed that the total cost to the 6,275 practices in England could amount to £125.5m per year. This is equivalent to 2.24 million GP appointments, costed at £56 per appointment.
A version of this article was first published by our sister title Pulse PCN
