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

Assistant Team Manager - Hospital Discharge

Durham County Council
Grade 12 - £44,075 - £48,226
Join us as we strengthen the heart of our hospital’s social work service. We’re seeking a supportive, skilled leader who can guide a dedicated team th Durham
Recuriter: Durham County Council

Customer Service Officer

Durham County Council
Grade 6 £28,142 to £31,022 per annum
Are you calm under pressure, enjoy working with people, and thrive in a role where no two days are the same? We’re looking for a confident, approachab Durham
Recuriter: Durham County Council

Apprentice Business Administrator

Durham County Council
£15,434 per annum (£8.00 per hour) NMW
Earn.  Learn.  Qualify. Do you want to earn while you learn? Do you want the opportunity to grow, develop and be the best version of yourself? Then wh Newton Aycliffe
Recuriter: Durham County Council

Lunchtime Supervisor

Durham County Council
£24,796 (pro rata)
Lunchtime Supervisor 2 positions available. Grade 1- £24,796 (pro rata) Permanent- Part time- 8
Recuriter: Durham County Council

Heads of Service - Cared For/Care Leavers

Cheshire East Council
£76,261 - £88,631
With strong investment, renewed energy and a clear sense of purpose across our services. Cheshire
Recuriter: Cheshire East Council
Linkedin Banner