In a letter to Members of Parliament, Third Sector Leeds (TSL) has highlighted the severe implications of upcoming changes to Employers National Insurance Contributions (ENICs) on voluntary, community, and social enterprise (VCSE) organisations.
The changes, set to take effect in April 2025, include an increase in ENIC rates to 15% and a threshold reduction to £5,000. TSL warns these measures could devastate local charities and nonprofit organisations already grappling with financial challenges. According to estimates, the impact on the sector in Leeds alone could exceed £5 million annually, forcing some organisations to reduce or eliminate essential services that vulnerable communities depend on.
TSL underscored the findings from a 2024 Forum Central survey, which revealed that:
– 64% of local organisations who responded are at risk of losing staff, a significant rise from previous years.
– Nearly 88% of respondents face the possibility of service reductions.
– Over 14% of respondents may be forced to close.
The letter also acknowledged the sector’s support for the National Living Wage increase but pointed out its compounding effect on already stretched budgets. TSL calls on the government to introduce a sector-specific exemption from the ENIC increases, aligning with the Civil Society Covenant’s commitment to supporting a resilient civil society.
Without this intervention, TSL fears the stability of essential community services in Leeds and across the UK will be jeopardised at a critical time.
The organisation remains open to discussions with policymakers to explore sustainable solutions for the VCSE sector.
You can read the letter sent to Rachel Reeves from TSL here: TSL Letter to MPs about ENIC increase.
Response to NCVO’s Open Letter
The Chancellor has replied to NVCO’s open letter, which was sent on behalf of the sector with over 7300 signatures. The letter called for urgent action on the planned increase to employer National Insurance Contributions (NICs) for the voluntary sector announced in the October budget.
Read the Chancellors response on NCVO website
The response is disappointing and falls short of our expectations.
Extract from NCVO’s statement:
“The reply from the Chancellor acknowledges the vital contribution of civil society while reiterating the scale of the challenge ahead for the new government, and why this decision has been made and cannot be changed.
Although this isn’t the news we want, we’re committed to raising the voice of the sector on this issue so that government understands the very real impact it is having, and where possible will seek to minimise the impact of these changes.
While we do that, it’s important that we commit to developing a stronger partnership between government and the sector in the future. In her letter, the Chancellor recognised our role as a trusted and independent partner.”
