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

Deputy Manager - Children's Homes Service

Durham County Council
Grade 11, £40,777 - £45,091 per annum. Pay award pending.
As a Deputy Manger you will work directly with children and young people, their families and carers, as well as other relevant professionals identifie Spennymoor
Recuriter: Durham County Council

Apprentice Financial Management

Durham County Council
£15,434 per annum (£8.00ph) NMW
Earn.  Learn.  Qualify.   Do you want to earn while you learn, with the chance of progression once you qualify? Do you want the opportunity to grow, d Durham
Recuriter: Durham County Council

Apprentice Civil Engineer

Durham County Council
£15,434 per annum (NMW in first year of apprenticeship)
Earn.  Learn.  Qualify. Do you want to earn while you learn, with the chance of progression once you qualify? Do you want the opportunity to grow, dev Durham
Recuriter: Durham County Council

Higher Level Teaching Assistant

Durham County Council
£30,024 - £33,699 (Pro Rata)
Fixed Term Contract until 31st August 2027 Full Time - Term Time plus 2 weeks Required to start as soon as possible.   The Governors seek to appoint a Durham
Recuriter: Durham County Council

Residential Worker

Durham County Council
£30,024 - £33,699 pay award pending
WHAT WE DO MATTERS At Aycliffe Secure Centre what we do truly matters; we provide a caring, trauma informed and aspirational environment for young peo Newton Aycliffe
Recuriter: Durham County Council
Linkedin Banner