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GP practices set for £2,000 cut in employer National Insurance rates

GPs are set for a £2,000 cut in National Insurance rates when they hire practice staff, but pay increases for public sector workers will be capped at 1%, the Chancellor has announced.

As part of his annual budget, Chancellor George Osborne said the Government would introduce a new employment allowance to reduce employer National Insurance contributions.

The Budget document from the Treasury said: ‘The Budget announced reforms to support small business, including those looking to take on their first employee, by introducing a new £2,000 Employment Allowance to reduce employer National Insurance contributions (NICs) for all businesses.’

Mr Osborne also reaffirmed the Government’s commitment to restrict pay increases for public sector workers, including those working for the NHS, to 1%, but pointed out that the NHS budget had again been protected from cuts.

‘The promise to our NHS is a promise we will keep,’ he said.

Bob Senior, head of medical services at RSM Tenon Accountants, said the reduction in employer National Insurance rates was the ‘only positive thing’ in the budget for GPs.

He said: ‘£2,000 a practice is better than a poke in the eye with a sharp stick. It does mean that a single practice with one GP will get £2,000 as will a practice with hundreds of staff, so smaller practices will benefit the most. That’s the only positive thing - the cap of 1% on pay increases isn’t good.’

‘Osborne has cut the corporation tax rate, making great play that Britain is open for business. He forgets businesses like GPs are not run though limited companies so it does nothing for them.’

Dr Mark Porter, chair of BMA Council, said Mr Osborne’s claims that he had protected the NHS budget was disingenuous.

‘We welcome the fact that the Government continues to recognise the importance of the NHS, and the scale of cost inflation in healthcare,’ he said.

‘However, it is not the case that health has been exempted from the financial pressures facing the rest of the public sector. The NHS has been asked to deliver cost savings of £20 billion by 2015. Posts are being cut and services are being rationed.’

He also expressed disappointment at the news that pay rises would be restricted to 1%, arguing that most senior doctors including GPs would not have seen a pay increase through moving up pay brackets as ministers have suggested.

He said: ‘We’re concerned that the Chancellor is seeking to meddle in NHS pay processes. As MPs noted this week, pay restraint cannot be seen as a long-term savings strategy for the NHS. Efficiency gains will be achieved by focusing on quality, not by suppressing pay.’