Neither MHCLG nor HM Treasury have assessed the impact that increases in national insurance contributions (NICs) will have on local government services. In April 2025, the NIC employer rate increased from 13.8% to 15% whilst the threshold at which employers start paying NICs on employee earnings reduced from £9,100 to £5,000 with the aim of raising more tax to fund the increase in public spending. In February 2025, government made £515 million available to support local authorities with the NIC-related increases in their direct employment costs. This amount was never intended to fully compensate local authorities, and neither MHCLG nor HM Treasury undertook an assessment of the indirect costs to local authorities. These increases will inevitably have implications, particularly for small charitable organisations, and knock-on effects to the markets, such as in Adult Social Care - which may result in private providers passing on cost increases to local authorities or handing back contracts. Some local authorities may be able to provide financial support to service providers for these increases in costs, but it is unacceptable that MHCLG and HM Treasury have not assessed how much impact this could have on local authorities. RECOMMENDATION Before the local government finance settlement, MHCLG working with HM Treasury should carry out a post implementation review of the increase in National Insurance Contributions and report back to the committee on: • the immediate impact on third-party providers and care markets; • the longer-term knock-on effect on the provision of local government services; and • any action that may be taken to reduce any adverse impact.