Schools will be given compensation to cover the Government’s planned increase to national insurance contributions paid by employers, the Education Secretary has said.
Bridget Phillipson said schools and colleges will be given compensation at a national level, after Rachel Reeves announced last week the tax would go up by 1.2 percentage points to 15%.
The Chancellor added employers will have to start to pay national insurance when staff are paid more than £5,000, compared with £9,500 previously.
Newly appointed shadow education minister Neil O’Brien (Harborough, Oadby and Wigston) asked whether headteachers and college leaders would get extra money to cover the higher costs, including for suppliers and indirectly employed members of staff.
Speaking during education questions, Ms Phillipson (Houghton and Sunderland South) told the Commons: “What I can say is that where it comes to schools and colleges, they will be compensated at a national level.
“What I would however just point out to (Mr O’Brien) is that when I became Secretary of State in July, I was presented with the Teachers’ Pay Review Body award – 5.5% – that the last government received, put in a drawer, ran away and called an election.
“We have backed our teachers who are crucial to the life chances of our children, and that’s why I was delighted that we were able to honour that award and recognise the vital contribution our teachers make.
“And that’s how we will recruit 6,500 new expert teachers. If they are refusing to back our commitments on VAT, then they should set out how many teachers they intend to cut.”
Mr O’Brien had asked: “What is the cost to schools and colleges of the national insurance increase and how much will be provided to them in compensation?
“And can (Ms Phillipson) confirm clearly that they will be fully compensated for the increased prices that suppliers and indirectly employed members of staff like caterers, IT and premises staff will be charging as a result? Will those indirect costs be covered, yes or no?”
The Government was also urged to protect childcare providers from the impact of the rise, with Liberal Democrat education spokesperson Munira Wilson (Twickenham) said saying two-thirds of early years places are provided by private and voluntary sectors.
Ms Phillipson said the Government will provide £8.1 billion for the early years entitlements in 2025/26, adding: “We are also increasing the employment allowance to £10,500 and expanding this to all eligible employers, so smaller providers may pay no national insurance at all in 2025/26.”
Ms Phillipson had told newly appointed shadow education secretary Laura Trott that the Government would announce whether early years funding rates for age groups would change to reflect the national insurance hike.
“We will be setting out more detail on funding rates in due course,” she said.
Speaking on the day of her appointment, Ms Trott (Sevenoaks) defended the previous government’s record in office and asked why Labour was not looking to continue some of its policies.
She said: “There’s been a lot of discussion about our record in government. Under the Conservatives England climbed international educational league tables, what happened in Labour-run Wales? It fell. Youth unemployment went down, school standards improved. Now that is the record of a Conservative government, and it’s one I am proud to defend.
She added: “While we are learning the lessons of our defeat, they are failing to learn from the brilliant record that we have on school standards. Results improved, more schools ‘good and outstanding’, and now the party opposite are trying to undermine one of the very basis for the success.
“So why is she scrapping the academy conversion grant when it has been such a push behind that we are trying to do in terms of improving school standards?”
Ms Phillipson replied: “I am sorry to disappoint (Ms Trott), but we will be talking about their 14 years of failure for a very long time indeed. And that’s because children across our country were failed by her party time and again.”
