Increases to employers’ contributions are putting pressure on rural and island communities.
Orkney’s third sector faces an unprecedented challenge to its lifeline services due to rising employer National Insurance (NI) contributions.
Charities such as Age Scotland Orkney, Relationship Scotland Orkney (RSO), and Crossroads Care Orkney already operate on limited budgets in an isolated and high-cost environment.
The groups said the essential local services see their future sustainability under threat, warning of soaring employment costs, recruitment and retention challenges, and reductions in service delivery across the islands.
In Orkney, the geography and remoteness of the islands mean alternative support services are often unavailable. The third sector plays a vital role in addressing social isolation, providing mental health support, and delivering care services that reduce reliance on overstretched public services.
Without sustainable funding, these lifelines are at risk, disproportionately affecting vulnerable individuals and families who rely on them most.
Age Scotland Orkney told TFN they anticipate an additional £10,000 in Employer NI payments for 2025/26, a significant burden that stretches their capacity to deliver essential support services.
They told TFN that “the additional £10,000 burden will have a significant impact, adding: “For us, it’s the difference between maintaining current services and cutting back on essential support for older people in Orkney."
This increase was also reflected in figures for Voluntary Action Orkney (VAO), who estimates an extra £7,500 in Employer NI payments for 2025/26, leaving less flexibility to support local voluntary organisations effectively.
VAO said staff wages account for the majority of third sector expenditure, and rising NI contributions amplify financial strain, meaning charities will struggle to offer even modest pay increases essential to retaining qualified staff.
Remote and rural charities like Crossroads Care Orkney already face challenges in competing with public sector salaries. The rising cost of living exacerbates this, threatening the stability of the workforce.
Rising employment costs, compounded by inflation and soaring utility bills, forceorganisations to make difficult decisions. Many risk cutting service hours,reducing capacity, or discontinuing critical programs entirely.
Staff-related costs represent 85% of the outgoings of Relationship Scotland Orkney (RSO), who told TFN they will struggle to sustain vital relationship and family support services as funding fails to keep pace with inflation.
They told TFN: “Our services are accessed by hundreds of people and relieve pressure on public services at a time when they are critically over-stretched. A hike in employer costs makes it harder for us to meet the growing needs of our community."
Those struggling to offer higher wages also said this will increase pressure on their services, with Crossroads Care Orkney, whose staff earn at or near the minimum wage, facing intensified difficulties in recruiting and retaining employees, further jeopardising care provision.
The charity told TFN: "Our carers are paid at or near the minimum wage. With rising costs, we can’t compete with public sector wages, putting the future of our service delivery – and the people who depend on us – at risk."
Despite these growing challenges, Orkney’s third sector has consistently demonstrated extraordinary resilience and adaptability.
Charities across the islands have a proven track record of overcoming financial and logistical hurdles, finding innovative solutions to ensure that essential services continue to reach those in need.
From pooling resources and streamlining operations to fostering collaboration among organisations, the third sector remains steadfast in its commitment to serving the community.
"Orkney's third sector has faced many challenges over the years, from funding crises to operational pressures brought by the pandemic," said Morven Brooks, chief executive of VAO.
"Each time, we've adapted, innovated, and found ways to keep going. However, the combined pressures of inflation, soaring utility costs, and now increased Employer National Insurance contributions are testing even our most resourceful efforts. While we remain resilient, we urgently need support to continue delivering the services our communities depend on."
VAO added that without intervention, the financial burden will fall on the most vulnerable members of society, who have no alternatives for support - calling for mitigations to be put in place to protect their futures.
The group’s chief executive told TFN: "Rising Employer National Insurance contributions threaten the very fabric of our third sector in Orkney. Charities here are not just service providers; they are lifelines in communities where no alternative exists.
“Without urgent support, the consequences for the health and wellbeing of our island residents will be profound.
"Rising Employer National Insurance contributions threaten the very fabric of our third sector in Orkney. Charities here are not just service providers; they are lifelines in communities where no alternative exists.
“While we’ve always shown resilience, we cannot keep absorbing these costs without significant support."
