A nursery in the West Country will have to fork out an additional £500,000 every year thanks to the rise in employer National Insurance contributions unveiled in last week’s Budget, Chancellor Rachel Reeves has been warned.
Vikki Slade, the Liberal Democrat MP for Mid Dorset and North Poole, made her shocking claim as she highlighted the impact the sweeping changes would have on local businesses and charities in her constituency.
Ms Slade said: “To govern is to choose, and I am shocked at some of the short-sightedness of the decisions in last week’s Budget.
“While average workers may not see a tax increase on their payslip, their employers are now faced with the difficult choice of whether to consider pay rises at all, or whether redundancies might be necessary.”
Ms Slide continued: “Corfe Mullin Dental Practice recently hired a graduate dentist to help serve local NHS patients, particularly children, but the NI increase has effectively eliminated half of her salary.
“If we are to retain NHS dentists, they need immediate exemptions from these hikes.”
Ms Slade also noted that Julia’s House Children’s Hospice is facing an additional £242,000 annually due to the National Insurance rise.
Meanwhile, Tops Nursery, which operates multiple early years settings in her constituency, anticipated shelling out an eye-watering half a million pounds in extra costs, without any corresponding increase in government childcare funding.
Ms Slade concluded: “The Liberal Democrats have long advocated for increased taxes on energy companies and big banks. We believe those with the broadest shoulders should bear the heaviest burdens.
“Unfortunately, this Budget appears to have misjudged where those broad shoulders lie.”
Ms Reeves last Wednesday announced a significant rise in employer National Insurance Contributions (NICs), increasing the rate from 13.8% to 15% starting in April 2026.
She described this decision as the “hardest” of the Budget, aiming to secure funding for essential public services and health spending without directly raising taxes on workers.
This increase is expected to generate £25.7 billion by 2028, but has sparked concerns from businesses, which warn it could affect wages and lead to job cuts.
To mitigate some of the impact, Ms Reeves doubled the Employment Allowance for small businesses to £10,500.
Speaking on Sunday, Ms Reeves admitted she was “wrong” when she said during the election campaign that she would not need to raise taxes, but insisted further increases will not be needed.
During a campaign event on June 11, Ms Reeves said she would not need to raise taxes beyond the increases already set out in the Labour Party’s manifesto.
However, she told Trevor Phillips: “I arrived at the Treasury on July 5, just over a month after I said those words.
“I was taken into a room by the senior officials at the Treasury and they set out the huge black hole in the public finances, beyond which anybody knew about at the time of the general election.”
