The Government’s failure to consider the impact that the National Insurance Contributions (NIC) increase would have on councils was a ‘major misstep’, MPs have said.

A new report by the Public Accounts Committee (PAC) found that the Government undertook no assessment of the indirect costs to councils of the NICs rise in April.

It warned private providers, such as those working in the adult social care sector, may pass on costs to councils or hand back contracts.

The report also raised concerns over councils’ overspending on special educational needs and disabilities (SEND), reiterating the committee’s warnings about the March 2026 deadline for the end of the ‘statutory override’, which enables councils to keep these deficits from their main budgets.

The Government has indicated that it will bring forward further plans for SEND reform in a white paper on schools in autumn 2025.

‘Alarmingly, scrutiny of council finances can now provoke a sense of déjà vu, with the same unfixed issues seen over and over,’ said PAC chair Sir Geoffrey Clifton-Brown MP.

‘We would urge the Government to use the funding announced in this spending review as a starting point for the paradigm shift required.’

Responding to the report, Cllr Louise Gittins, chair of the Local Government Association, called for ‘urgent clarity’ on how the Government plans to address high needs deficits.

Minister of State for Local Government and English Devolution, Jim McMahon OBE MP, criticised the report, arguing its claims are ‘not supported by the evidence.’

‘We’ve taken action to restore the audit system to a functioning state, recast our approach to council best value and we are laying legislation to bring in a new Local Audit Office,’ he said.

‘The Spending Review provided over £5bn of new grant funding for local services, and that's on top of the £69bn we have already injected this year to boost council finances.’