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

Area Tree Officer (South)

Oxfordshire County Council
£34434 - £37280
About you Are you an experienced Tree Officer / Arboriculturist who wants a new challenge and the opportunity to deliver and influence tree retention and management across one of England’s most beautiful and diverse treescapes? Are you recently qualifie Witney
Recuriter: Oxfordshire County Council

Officer - Applications and Data Management

Oxfordshire County Council
£34434 - £37280
About Us Oxfordshire County Council are leading the way in ensuring that we work efficiently and in a climate conscious way and this is only possible with the help of our Applications and Data Management Team. About the Role You will be providing system County Hall
Recuriter: Oxfordshire County Council

Social Work Apprentice

Oxfordshire County Council
£34434 - £37280
Together, we’re shaping children’s social care for the future. Every day, our colleagues are helping to transform the lives of the residents of Oxfordshire. In our Children, Education, & Families directorate, we’re committed to delivering lasting c Oxfordshire
Recuriter: Oxfordshire County Council

Local Authority Research Practitioner

London Borough of Richmond upon Thames and London Borough of Wandsworth
£38,976 - £47,229
Local Authority Research Practitioner
Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth

Rehabilitation Officer Vision Impairment

London Borough of Richmond upon Thames and London Borough of Wandsworth
£38,976 - £52,767
Rehabilitation Officer Vision Impairmen... Twickenham, London
Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth
Linkedin Banner