I can't 'magic money' to offset NI hike - minister

The Welsh government cannot "magic money" from its budget to help certain organisations hit by the rise in employers' National Insurance contributions, Finance Minister Mark Drakeford has said.

The UK government says it will give Welsh ministers funding to cover the cost for workers directly employed by the public sector.

But workers at private businesses, including GP surgeries, and charities who provide services for the public sector will not be covered.

It will come as a blow to those bodies, who have been lobbying the Welsh government to step in and help.

Opposition parties accused Labour ministers in Cardiff of not standing up for Welsh interests.

Drakeford said: "I cannot say this morning that the answer to the problem is that the Welsh government will provide."

He also told the Senedd's Finance Committee that he had some "objections of principle" about diverting money from public services to cover responsibilities that he said lay elsewhere.

Earlier in the session, taking place to scrutinise the Welsh government's draft budget, Drakeford told Senedd members: "What I am not going to be in a position to do is to provide money to organisations in Wales for which the Welsh government is not being provided with funds.

"Any money we get to cover the cost of public sector employers we will pass directly to those services. We are simply a pass-through for those purposes.

"But I can't magic money out of the Welsh government budget to cover costs that are not being covered elsewhere.

"I've been following what my colleagues have been saying in front of all the committees and this has come up absolutely regularly: 'How are you going to be able to help this organisation, how are you going to help that organisation?'

"The answer is we are not going to be able to beyond the help we are providing in general.

"In local government there is a 4.3% uplift… I've been continuing to have discussions to see if there are any further pressure points that we might be able to assist with, but at that point we will have exhausted the Welsh government's ability to help."

Charities, GPs, social care providers and other organisations have been lobbying the UK government to reverse its NI plans.

In Wales they have also called on the Welsh government to step in and mitigate the impact if there is no change.

A leading Welsh cancer charity has already given evidence to the committee about the "devastating" effect the NI increase will have.

Employers' National Insurance contributions will go up in April after plans revealed by Chancellor Rachel Reeves in her budget in October – the move is expected to raise £25bn.

Drakeford also confirmed he had written to the chief secretary to the Treasury at Westminster outlining his concerns over how much money the Welsh government would receive to cover the NI increase.

He said that using the Barnett formula – the usual way in which a funding consequential for Wales is calculated as a result of extra spending in England - would be "fundamentally unfair."

He told the committee there was a risk that public sector employers in England would be fully covered and those in Wales would not.

The size of the public sector in Wales is proportionately larger than in England.

Drakeford will meet the Chief Secretary to the Treasury, Darren Jones, at a meeting of UK finance ministers next month in Cardiff.

Welsh Conservative shadow finance secretary Sam Rowlands said GPs, charities and businesses were "in the lurch" because Labour ministers in Cardiff were "failing to stand up to the UK Labour government's decision to hike national insurance".

"The very survival of some of these organisations depends on the support Labour must offer them," he said.

Plaid Cymru finance spokesperson Heledd Fychan said: "Wales is once again an afterthought for Labour, as England's public sector will be shielded from the NI rises, but the unfair Barnett formula means the Welsh public sector will feel the brunt of these tax rises.

"Despite being promised a 'change in tone' and a 'partnership in power', promising things would be better; it's the same old story with Labour in Wales refusing to stand up for Wales against Starmer and Reeves."

Welsh Conservative shadow finance secretary Sam Rowlands said GPs, charities and businesses had been left "in the lurch" because Labour ministers in Cardiff were "failing to stand up to the UK Labour government's decision to hike national insurance".

"The very survival of some of these organisations depends on the support Labour must offer them," he said.

Plaid Cymru finance spokesperson Heledd Fychan said: "Wales is once again an afterthought for Labour, as England's public sector will be shielded from the NI rises, but the unfair Barnett formula means the Welsh public sector will feel the brunt of these tax rises.

"Despite being promised a 'change in tone' and a 'partnership in power', promising things would be better; it's the same old story with Labour in Wales refusing to stand up for Wales against Starmer and Reeves."