Government should reimburse schools if employer national insurance contributions are increased, says NFER

Following reports of a proposed increase in employer national insurance contributions (NICs), NFER has estimated what impact this may have for schools and their budgets should the Government choose not to reimburse schools.

NFER has estimated the addition of 1% to the headline employer NICs rate would result, at minimum, in a cost of £175-£200 million to school budgets in England for the forthcoming year. This would be £350-£400 million per year with a 2% increase.

This could add significant strain to school budgets, particularly at a time when budgets are already stretched. Last year, NFER's Cost-of-Living report found that school leaders were taking difficult decisions to cut spending on learning resources and on buildings and maintenance in order to balance budgets. Without additional funding for schools, budgets would be further stretched by an increase to employer NICs.

NFER Chief Executive, Carole Willis, said: “Any unfunded employer NIC increases are likely to further exacerbate funding issues for schools.

“The government must carefully consider funding schools to pay for rises in employer national insurance contributions and balancing this against the wider economic outlook. With budgets already strained following the pandemic and cost-of-living crisis, further unexpected costs may impact negatively on children and young people's learning and experiences. This consideration should encompass both schools and Further Education colleges.”

Note: NFER's estimate applies to all state-funded schools in England. It is based on teacher and senior leader salaries alone, and therefore does not include wider workforce costs, such as Teaching Assistants and other support staff. The full cost of an increase would therefore be higher. Data is not readily available on pay for the other staff but expenditure statistics show schools' spend on teachers is significantly larger than their spend on other staff.