NHI hike to cost bus industry £95m a year

Changes will drive contribution costs up by 26%

The changes to the Employers’ National Insurance announced in today’s budget will hit bus operators with an increase of almost 26% in the cost of contributions, according to estimates by Passenger Transport Monitor.

Under the changes announced in the budget by Chancellor Rachel Reeves, the contribution rate will increase from 13.8% of wages to 15%. At the same time, however, the “Lower Earnings Limit”, below which contributions are not payable, will be cut from its current level of £9,096 per annum down to £5,000. This change will cost £600 a year for each employee.

At current bus industry average earnings of around £35,000 a year, the bill for each employee will rise from £3,584 to £4,510. Across the industry as a whole, this would take the cost of national insurance from a current level of £370m a year up to £465m - an increase of £95m.

As well as helping to drive fares upwards, this increase will directly impact on the viability of marginal bus services, risking in further cuts in provision. It will also increase the cost of providing services to local transport authorities, schools and other customers – putting the cost straight back to the public purse.