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

Key Worker - Young Carers

Essex County Council
£25081.00 - £27653.00 per annum
Key Worker - Young CarersPermanent, Full Time£25,081 to £27,653 per annumLocation
Recuriter: Essex County Council

Senior Pest Control Technician

Middlesbrough Council
£31,022 - £32,597
We have an exciting role on offer within our Environmental Service as a Senior Pest Control Technician Middlesbrough, North Yorkshire
Recuriter: Middlesbrough Council

Head of Housing Solutions, Support & Prevention

Middlesbrough Council
£66,578 - £72,028
We are looking for an outstanding, forward thinking Head of Housing Solutions, Support & Prevention Middlesbrough, North Yorkshire
Recuriter: Middlesbrough Council

Democratic Services Officer

Middlesbrough Council
£41,771 - £44,075 pro rata
We have an exciting role on offer within our Legal services as a Democratic Services Officer. Middlesbrough, North Yorkshire
Recuriter: Middlesbrough Council

Community Development Officer

Middlesbrough Council
£36,363 - £38,220
We have an exciting role on offer within our Neighbourhoods Service as a Community Development Officer. Middlesbrough, North Yorkshire
Recuriter: Middlesbrough Council
Linkedin Banner