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

Housing Support Officer

North East Lincolnshire Council
NJC19 - £ 33,119
You will support vulnerable households who are temporarily accommodated by the Council, North East Lincolnshire
Recuriter: North East Lincolnshire Council

Premises Manager - Signhills Academy

North East Lincolnshire Council
NJC POINT 15 / FTE - £31,015
You will supervises and participates in providing comprehensive site user access and security North East Lincolnshire
Recuriter: North East Lincolnshire Council

Higher Level Teaching Assistant - New Waltham Academy

North East Lincolnshire Council
NJC19 point 15 - £31,015 pro rata
You will support all pupils, including those with SEN, with their learning and personal care needs New Waltham, Grimsby
Recuriter: North East Lincolnshire Council

Cook

North Yorkshire Council
£13.92- £14.59 per hour
As a Cook you will be delivering an effective catering service operating to the highest standards of food safety. Y York, North Yorkshire
Recuriter: North Yorkshire Council

Communities Locality Lead

North Yorkshire Council
£53,051 - £57,372 per annum
We’re looking for an inspiring, community‑focused leader to join our Localities Service as the Communities team Locality Lead for Selby & Ainsty. Selby, North Yorkshire
Recuriter: North Yorkshire Council
Linkedin Banner