Labour’s first Budget in 14 years is out. It was billed as a radical move to protect the most vulnerable, and certain measures clearly reflect that sentiment: taxes concentrated on higher earners and inherited wealth, and, most notably, the increase of the minimum wage.
Whilst each measure can be debated, one announcement will almost certainly massively disadvantage some of Britain’s most vulnerable. This is the increased employer National Insurance contributions, and, specifically, the decision not to exclude charities from this.
Over one million people were employed in the voluntary sector in the UK in 2024. A large proportion of funding for charities goes on salaries of their dedicated staff. An additional 1.5 per cent on all wages in real terms means charities’ expenses will increase and less of the funds raised will directly support their beneficiaries.
I’m not a politician, nor an economist, but my experience as CEO of Noa Girls, a charity for girls with mental health challenges, tells me that, whilst the government’s desire to cover their vast budget is understandable, this choice is ill-decided and dangerous.
Whether large or small, most charities cannot absorb this cost without it detrimentally affecting service delivery. This is certainly true in the mental health sector. Mental health charities are crucial to the communities they support. Over the last few years, mental health needs have exploded. The NHS found that, in just six years, between 2017 and 2023, the number of eight to 16-year-olds with a probable mental health disorder rose from 12.6 per cent to 20.8 per cent.[i]
Public funding and statutory services that provide mental health support have not grown at the same pace, with a £700 million real terms reduction in funding between 2014 and 2021, a 25 per cent decrease per person. The result is immense pressures on mental health charities who provide a critical safety-net for so many.
At Noa, we see first-hand the effect on girls, and their families, left with inadequate or no statutory support, and our waiting list of 53 girls attests to the growing need. Whilst we are very appreciative of the statutory funding we receive through the NHS in grants, it doesn’t cover even a fraction of the need.
Charities can reach populations that the NHS can’t get through the door. They are free to provide support more flexibly and creatively than statutory services. Noa’s 97 per cent engagement rate and our high recovery statistics are, in part, due to our creative, tailored, adolescent-friendly approach, which encourages girls to accept support they otherwise would not.
It is extremely disheartening to know that with the right support and the right resources, in so many cases, recovery is possible, but this government measure is limiting our ability to help people get there.
When the government needs to be reversing the tide of mental illness and its damaging effects on individuals, their families and the community, it is disabling solutions that already work. Charities often catch individuals before they fall into the higher threshold eligible for statutory services. Ironically, whilst seeking to plug the NHS deficit, this measure and its resulting reduction in charitable services will cost the NHS more in expensive and damaging hospitalisations for those who could have been helped at an earlier stage.
Mental health charities are working at full capacity on increasingly stretched budgets. This extra tax through NI contributions will further reduce support to those who rely on lifesaving services. To elevate those most vulnerable in the community, the government needs to exempt charities from the NI contribution rise or risk leaving those most in need of support to struggle alone.
[i] Mental Health of Children and Young People in England, 2023: wave 4 follow up to the 2017 survey (NHS England)
Naomi Lerer is CEO of Noa Girls
