Changes made to employer National Insurance contributions in October’s Budget must be fully funded in the forthcoming provisional local government finance settlement, the LGA has said.
It has calculated that the rise in contributions will increase council wage bills for directly employed staff by £637 million and add up to a further £1.13 billion to the wage bills of external providers of council-commissioned services – including £628 million for adult social care services alone.
Other organisations, including the Association of Directors of Social Services and the Nuffield Trust, have also raised concerns about increased costs arising from the National Insurance changes, and the impact these will have on adult social care in particular. LGA Chair Cllr Louise Gittins said it was “vital” the provisional finance settlement – due to be published before Christmas – covers the increase in National Insurance contributions.
“Without action, councils will be forced to make further cuts to statutory services, and risk not fulfilling some of their most important duties,” she added.
The finance settlement is due out the week of 16 December, and is expected to reflect the Government’s recent local government finance policy statement, published in late November.
The statement set out proposals for changing the way the sector is funded, and committed to multi-year funding settlements from 2026 – something the LGA and councils have long called for.
Cllr Gittins said: “We look forward to working with government as part of the relationship reset between central and local government to co-create the key services and outcomes for local authorities to deliver, in the context of locally set priorities and a robust system of accountability and oversight.”