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

Head of IT

YPO
£76,999 plus £3,000 car allowance and generous benefits package
As our new Head of IT, you will play a pivotal role in shaping the future of technology across the organisation. North Yorkshire
Recuriter: YPO

Biodiversity Officer

Royal Borough of Greenwich
PO2 - £42,771 to £45,750
The person recruited to this post will manage Royal Borough of Greenwich’s Biodiversity/Ecological response Greenwich, London (Greater)
Recuriter: Royal Borough of Greenwich

Children and Families Advisor - 12 month FTC

Essex County Council
£25395.00 - £32131.00 per annum + + 26 Days Leave & DB Pension Scheme
Children and Families AdvisorFixed Term, Full Time£25,395 to £32,131 per annumLocation
Recuriter: Essex County Council

Public Health Consultant (x2)

Lancashire County Council
£97,330 - £106,628 per annum
We’re looking for leaders who are collaborative, innovative and committed to improving outcomes for Lancashire’s residents. Lancashire
Recuriter: Lancashire County Council

Executive Director – Finance & Resources

YPO
£108,222 plus £3,500 car allowance and generous benefits package
As Managing Director, I’m delighted that you’re exploring this opportunity at such a pivotal moment in our organisation’s journey. North Yorkshire
Recuriter: YPO
Linkedin Banner