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.

Half a century in the chamber image

Half a century in the chamber

Cllr Dr James Walsh was elected to Arun District Council in 1975. Here he tells LocalGov what he's learned about trust, transformation and keeping it local.
SIGN UP
For your free daily news bulletin
Highways jobs

Senior Care and Housing Support Officer

Sandwell Metropolitan Borough Council
Band D, SCP 9 -17 (£27,254 - £31,022 per annum) Pro Rata
There will be opportunities to develop with the team. Sandwell, West Midlands
Recuriter: Sandwell Metropolitan Borough Council

Strategic Finance Business Partner (Capital & Major Projects)

Sandwell Metropolitan Borough Council
Band J (£60,194 to £63,832)
This is an exciting opportunity to lead the financial management and oversight of the Council's Capital Programme and major projects portfolio Sandwell, West Midlands
Recuriter: Sandwell Metropolitan Borough Council

Strategic Finance Business Partner (Place OR People)

Sandwell Metropolitan Borough Council
Band J (£60,194 to £63,832)
Sandwell Council’s Finance and Transformation Division is seeking an experienced Strategic Finance Business Partner (Place OR People) Sandwell, West Midlands
Recuriter: Sandwell Metropolitan Borough Council

Co-ordination Support Officer

Wakefield Council
£26,824 - £28,142
Are you passionate about making a difference to our citizens and the district that they reside in? Wakefield, West Yorkshire
Recuriter: Wakefield Council

Senior Care Assistant

Wakefield Council
£21,641.72 - £23,865.83
We are a Dementia Care Home based in Knottingley, supporting vulnerable adults who have a diagnosis of Dementia. Wakefield, West Yorkshire
Recuriter: Wakefield Council
Linkedin Banner