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:
– Over 64% of local organisations are at risk of losing staff, a significant rise from previous years.
– Nearly 88% face the possibility of service reductions.
– Over 14% 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
