Yesterday, an email popped into my inbox from Chancellor of the Exchequer, Rachel Reeves. In this she explained that the first Labour Budget in more than 14 years was all about “fixing the foundations to deliver change”.
With a refreshed focus on prevention, this includes over £25.6 billion of new funding to cut waiting times by delivering an extra two million NHS operations, scans and appointments a year.
Here we’ve summarised two expert perspectives summarising the implications of the Budget for employee health and wellbeing:
The rise in employer National Insurance contributions
As many analysts had predicted, to meet the goal of raising £25 billion a year by the end of 2029/30, Reeves increased employer National Insurance (NI) rates by 1.2% from 13.8% to 15%, effective 6 April 2025. In addition, the threshold at which employers pay NI will change from £9,100 a year to £5,000.
It’s worth mentioning that, combined with changes to the Employment Allowance, the government says that in spite of the NI rate increase, 865,000 businesses will pay no NI contributions at all, and more than half of employers with NI liabilities will either see no change or will gain overall next year.
Commenting on the rise in NI contributions, Matt Russell, CEO of employee benefits technology provider Zest, says: “The spike in Employer NI contributions may curb salary growth but employers will take creative steps to unlock cost-effective approaches to reward employees beyond simply raising wages”.
“Employees are placing increasing importance on financial support from their employer and aren’t afraid to switch jobs to get the perks that they want. Employers must ensure that not only are they increasing investment in their benefits offering but delivering enhanced value by implementing the support employees are calling for”.
“Salary sacrifice is another option employers should be considering to mitigate the impact of rising NI contributions – this approach reduces employee NI payments and benefits both the individual and employer. Our customers are saving over £6.5m each month on employer NI contributions by utilising salary sacrifice which can then be invested back into offering employee the support they need”.
From sickness to prevention
Meanwhile David Williams, head of group risk, Towergate Employee Benefits, points out that although the headlines for the Autumn Budget understandably follow the Government’s plans around National Insurance and other funding mechanisms for public spending, the budget also provided a quiet but welcome insight into its aims around reducing sickness absence within the working age population.
Williams explains: “Firstly, we will see a “Get Britain Working” white paper which will aim to explore root causes of inactivity and poor health (amongst other things). Our employee benefits industry, which focuses so keenly on workplace health and productivity, will need to ensure that the Government listens to our collective voice and vast experience to help them formulate the right solutions. Employee benefits advisers and providers have been focusing on “getting Britain working” for decades through a host of health, protection and wellbeing tools provided under company benefits”.
“Secondly, there were green shoots regarding NHS funding where the Chancellor cited the aim of going “from sickness to prevention”. The employee benefits industry focuses heavily on prevention and rehabilitation for workplace sickness so this phrase is music to our ears”.
“However, the detail is still light and any investment will take time to improve NHS capacity and waiting lists. So it’s crucial that, in the meantime, employers take advantage of private sector support available through their various employee benefits”.
“The frustrating part though is that the increase to employer National Insurance contributions is likely to negatively impact company budgets at exactly the same time that we’re trying to encourage them to spend more on their employees’ health and wellbeing. Our role now is to ensure that the employers know that if they invest in well-structured employee support services then everybody benefits: the employers, the employees, their families and even the NHS”.
For more insight into what business can do to support the NHS, read next week’s special feature on www.makeadifference.media by Suzy Bashford.