Dan Peters 30 October 2024

Budget: Minimum wage and National Insurance rises to hit councils

Budget: Minimum wage and National Insurance rises to hit councils image
Image: Laurence Berger / Shutterstock.com.

Chancellor Rachel Reeves has confirmed rises to the minimum wage and employers' National Insurance contributions, piling further pressure on council budgets.

The minimum wage for over-21s will increase from April by 6.7% while councils' National Insurance contributions will rise from 13.8% to 15% by April.

Councils have said that supporting those on the lowest pay is not only fair but improves the motivation, loyalty, productivity and retention of hard-working staff.

However, the increase in the minimum wage from £11.44 to £12.21 per hour – worth up to £1,400 a year for a full-time worker – will make balancing budgets harder.

The increase – more than three times the current rate of inflation – comes after Labour changed the remit of the Low Pay Commission so that for the first time it took into account the cost of living when it agreed wages for the lowest paid.

Reeves said the wage increase would ‘support people with the cost of living' and ‘protect' workers.

On increasing employers' National Insurance contributions, Reeves said: ‘I do not take this decision lightly. I know there will be impacts of this decision beyond businesses too. In the circumstances I have inherited it is the right choice to make.'

She added opposing the National Insurance increase would lead to more ‘austerity, chaos and instability'.

The Government has not explicitly pledged to fund the National Insurance rise for councils but the sector's Departmental Expenditure Limit for 2025-26 will increase to £14.3bn, which includes an additional £1.3bn of additional grant funding for services.

SIGN UP
For your free daily news bulletin
Highways jobs

Social Worker - Adoption Mid Essex

Essex County Council
£36124.0000 - £51834.0000 per annum
Social Worker - Adoption Mid EssexPermanent, Full Time - 37 hours per week£36,124 to £51,834 per annum Location
Recuriter: Essex County Council

Senior Social Worker - Learning Disability & Autism

Essex County Council
£48205.0000 - £57988.0000 per annum + Flexible Working, Hybrid Working
Senior Social Worker - Learning Disability & AutismPermanent, Full Time£48,205 to £57,988 per annumLocation
Recuriter: Essex County Council

Finance Officer - Income Collection

Essex County Council
£25959.0000 - £28621.0000 per annum
Finance Officer - Income CollectionFixed Term, Full Time£25,959 to £28,621 per annumLocation
Recuriter: Essex County Council

Democratic Services Officer

Essex County Council
£30295.0000 - £35641.0000 per annum
Democratic Services OfficerSecondment, Full Time£30,295 to £35,641 per annumLocation
Recuriter: Essex County Council

Democratic Services Officer

London Borough of Richmond upon Thames and London Borough of Wandsworth
£47,730 - £57,837
Democratic Services Officer
Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth
Linkedin Banner