PCNs have been advised to be prudent in their spending and ensure they have reserves in case the full cost of the National Insurance hike is not covered by an increase in budgets in the year next.

Accountants have warned that PCNs will face “significant challenges” due to changes announced in the Budget at the end of October.

The Budget confirmed that the rate of employer National Insurance Contributions (NIC) will increase by 1.2 percentage points – to 15% – from April 6 next year. Although funds have been set aside to protect the public sector, GPs are not affected 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 extra £866.”

He added that this increase in the NIC is in addition to “below inflation increases in ARRS budgets allocated to PCNs in 2024/25”, which also contribute to the challenges facing PCNs.

He said: “PCNs would do well to be prudent in their ARRS spending and ensure they have some reserves in case the total increase in costs associated with employing staff is not covered by an improvement in budgets in 2025/26. »

PCN Central and West Warrington clinical director Dr Laura Mount said her PCN may have to consider cutting services if budgets are not increased to cover the extra costs.

“We were supposed to announce our salary increases for this year, but based on the budget we had to put that on hold and review what we can give,” she said.

“If the maximum reimbursable rates and overall ARRS budget do not increase significantly for next year, we will need to consider a reduction in service provision across the PCN. For example, not replacing roles when people leave and reducing some of the proactive care we provide.

Calculations by the Institute of General Practice Managers (IGPM) revealed that the NI increases would result in additional costs of around £2 per patientor around £20,000 per year for an average practice.

The Liberal Democrats used this analysis to calculate the total cost for the 6,275 practices in England which could amount to £125.5 million a year. This equates to 2.24 million GP appointments, costing £56 per appointment.

This could cost an average of 357 appointments per year, according to the party.

Ruth Rankine, director of primary care at the NHS Confederation, said she was “very concerned” about the impact of NIC increases on primary care.

“We are hearing reports that some primary care providers may be facing exorbitant annual costs on top of already very low financial settlements,” she said. “This could have a significant impact on capacity, with practices potentially having no choice but to close or reduce their services as they cannot afford to keep them running.

“Currently, there are more than 200 fewer general practices open in England than there were two years ago, at a time when the population continues to grow and people have more complex health needs.

“Our members welcomed the increase in funding for the NHS announced in the Budget, particularly the fact that health services have been prioritized given the difficult economic environment in which the Government is operating. We are grateful that the Government has recognized the vital role that general practice plays, including with the £100 million of capital investment and providing additional support to recruit GPs who would otherwise be out of work.

“But while GP practices can operate as independent partnerships, they are fully funded to deliver NHS services and should therefore receive the same support as NHS trusts and other public sector organisations.”

Asked by Pulse PCN last week what measures would be put in place to help PCNs mitigate the impact of this on their Additional Roles Reimbursement Scheme (ARRS) staff budgets, the Department of Health and Human Services Social Affairs (DHSC) gave details on funding allocations for next year will be defined “in due course”.

This weekend, the BMA launched a Network Card Calculator to help firms estimate the impact of this increase.

A version of this story first appeared on our sister title Management in Practice.