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PCNs have been advised to be cautious with their spending and ensure they have reserves in place in case the full cost of the National Insurance hike is not met by increased budgets next year.
Accountants have warned that PCNs will face ‘significant challenges’ due to the changes announced in the Budget at the end of October.
The Budget confirmed that the rate of employer National Insurance Contributions (NICs) will increase by 1.2 percentage points – to 15% – from 6 April next year. While funding has been set aside to protect the public sector, GPs are not included in this as they operate as independent businesses.
Andy Pow, board member of the Association of Independent Specialist Medical Accountants (AISMA) said ‘The reduction in the threshold means PCNs will have to pay more employer National Insurance contributions for all employees,’ he said. ‘This means an employee earning £30,000 a year will cost the PCN an additional £866.’
He added that this NIC increase comes on top of ‘below inflation uplifts to the ARRS budgets allocated to PCNs in 2024/25’, which also contribute to the challenges facing PCNs.
He said: ‘PCNs would be wise to be cautious with their ARRS spending and ensure they have some reserves in place in the event that the full cost increase of employing staff is not met by improved budgets in 2025/26.’
Clinical director at Central and West Warrington PCN, Dr Laura Mount, said her PCN may have to look at reducing services if budgets are not uplifted to cover the additional costs.
‘We were due to announce our pay increases for this year but based on the budget we have had to pause this and revisit what we can give,’ she said.
‘If the maximum reimbursable rates and the overall ARRS budget does not increase significantly for next year we will have to look at a reduction in service provision across the PCN. For example not replacing roles when people leave and cutting back on some of the proactive care we offer.’
Calculations by the Institute of General Practice Managers (IGPM) found that the NI rises would incur additional costs of around £2 per patient, or approximately £20,000 a year for the average practice.
The Liberal Democrats used this analysis to calculate the total cost to the 6,275 practices in England could amount to £125.5m per year. This is equivalent to 2.24 million GP appointments, costed at £56 per appointment.
This could cost an average practice 357 appointments per year, according to the party.
Ruth Rankine, director of primary care at the NHS Confederation, said they were ‘very worried’ about the impact of NIC increases on primary care.
‘We are hearing reports that some primary care providers could face eye-watering annual costs on top of already very low financial settlements,’ she said. ‘This could have dramatic impact on capacity, with practices potentially having no choice but to close or to cut back on their services as they cannot afford to keep them running.
‘As it stands, there are over 200 fewer general practices open in England than there were two years ago, at time when the population continues to grow, and people have more complex healthcare needs.
‘Our members welcomed the increased funding for the NHS announced in the Budget, particularly the fact that the health service was prioritised given the difficult economic context the government is operating in. We are grateful the government recognised the vital role general practice plays, including with the £100 million of capital investment and by providing additional support to recruit GPs that would otherwise be out of work.
‘But while GP surgeries may operate as independently-owned partnerships they are wholly funded to provide NHS services and so they should be given the same support as NHS trusts and other public sector organisations.’
When asked by Pulse PCN what measures would be put in place to help PCNs mitigate the impact of this on their Additional Roles Reimbursement Scheme (ARRS) staff budgets last week, the Department for Health and Social Care (DHSC) said details on funding allocations for next year will be set out ‘in due course’.
At the weekend, the BMA launched an NIC calculator to help practices estimate the impact of the uplift.
A version of this story was first published on our sister title Management in Practice.