The budget delivered on 30th October was a bumper one (you can read it here on the gov.uk site), but although she spoke for an hour and twenty minutes, the Chancellor Rachel Reeves said surprisingly little about the NHS or general practice.

Employer's NI Amount to Rise 

The headlines were written immediately by the announcement that employer’s National Insurance contributions are to rise by 1.2% to 15% from 6 April 2025. This led to shouts that Labour had broken their manifesto promise not to raise taxes “on working people”. Technically, they have not, as an employee will not pay for this rise in their monthly pay packet. However, as many have pointed out, employers will be forced in many cases to cut back on pay rises and hiring people to pay for the rise in their contributions, meaning indirectly that workers do get less money (and probably more work) than they otherwise would have.

However, it’s not clear to what extent this will affect the NHS and general practice. The NHS and the public sector more broadly are exempt from the tax rise – though that does not include hospices or private care homes. GP practices are run as small businesses. The DHSC have said that further detail will follow in due course. But speaking on Question Time this week, the Chief Secretary to the Treasury said that NI contributions will have to be paid by practices. "GP surgeries are privately-owned partnerships, they’re not part of the public sector," he said. "They will therefore have to pay them." He did note, however, that the amount they will have to pay will depend on their size, pointing out that there were measures in the budget to protect smaller businesses.

NI threshold lowered

What was less seen in the media reports, but equally important, was the point at which NIC has to be paid by employers. It was reduced from £9,100 to £5,000 per employee. That means that every employee earning above £9,100 currently must find an additional £615, plus 1.2% for the remainder of their earnings. 

Living and Minimum Wages Rise

The National Living and Minimum wages are also going up, but the Chartered Institute of Payroll Professionals have warned that previous rises to these wages have not encouraged businesses to be more productive, despite this being amongst the government’s top priorities.

The Institute of General Practice Management (IGPM) has already written to the Health Secretary to share worries that these changes – alongside changes to pension taxation - could spell real danger for the stability of General Practices throughout the country. Taken together, some have estimated that practices could see costs rise by £1.30 per patient. This may inevitably lead to some having to limit services, reduce staffing levels, or even close in extreme cases. The BMA has written a letter (available here) to the Chancellor setting out concerns about pensions taxation changes.

The other stand-out surprise was that there will be no freeze to income tax and NI thresholds from 2028 onwards, as had previously been assumed.

Measures for the NHS & Primary Care

The government’s 10-year plan for the NHS will be published in the spring of next year, but the direction of travel has been clear under Wes Streeting for some time. The new Labour government see it is as their mission to restore stability, rebuild the fabric of Britain and its health service, and deliver the change that they say the country so desperately needs. There is no doubt that the NHS needs it, and we should hope that the measures Rachel Reeves announced will help it to do just that:

• For starters, the government have set a 2% efficiency saving target for the NHS next year, for which they will be relying heavily on technology and data. As the Prime Minister has stated repeatedly, without reform and better efficiencies, there can be no real recovery or change.
• To help facilitate this and many other proposals, there will be a £22.6bn increase in the day-to-day health budget, and a £3.1bn increase in the capital budget.
• Dilapidated real estate is a prominent issue in many healthcare buildings, and as a result there will be £1bn set aside for crucial improvements to the safety and usability of buildings. (34% of RCGP currently say that their practice building is inadequate for providing patient care). Importantly, £100m has been earmarked for the upgrade of up to 200 GP estates. This will in part be designed to help GPs use existing space better to provide more appointments. However, in September the RCGP made it clear to the government that an additional ringfenced investment of at least £2 billion was needed to address the longstanding underfunding in general practice premises).
• It is well known that more hospital beds will be needed, as well as new tests and diagnostic centres to deliver them, and so there is also £1.5bn allocated for this, including £26 million earmarked for the opening of new mental health crisis centres.
• Work will continue on the seven RAAC-affected hospitals (built with dangerous Reinforced Autoclaved Aerated Concrete). 

However, there has been concern that other than the money for improving the estates of some GP practices, there was no other mention or any new money for general practice. The BMA were already asking government to increase GP funding by £40 per patient per year, but instead of that they have made finances even tighter, say the BMA, by increasing employer’s NI contributions. For example, the changes will mean that an employee earning £30,000 per year will cost the practice £866 more than before, from April 2025 onwards.

Staff retention continues to be a major issue and will not be helped by this budget. Yet the cost to the public finances of replacing one of the 42% of GPs who the RCGP say will be leaving the profession in the next 5 years is estimated by the BMA to be a staggering £295,000.

The point has been made again and again by primary care representatives that, despite more than 90% of a patient’s direct experience of the NHS being through primary care and GP practices, currently less than 10% of the NHS budget in England is spent on primary care. Until this changes, many would argue the budget and the new government is simply tinkering around the edges.

Our friends at Mitchells Grievson Chartered Accountants have put together a helpful webpage where you can read more on what the budget means for GPs and primary care: access it here. 

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