Adult social care costs for Nottinghamshire County Council could rise by £31 million following the Chancellor’s announcement on the increased minimum wage and National Insurance.
Nottinghamshire County Council’s Cabinet met yesterday (7 November) to discuss the state of the authority’s finances.
Councils across the country have had to assess their internal budgets against the new national living wage and employer contributions introduced by the government.
Chancellor Rachel Reeves confirmed that the wage will rise to £12.21 per hour from April 2025.
Increased wages and National Insurance will put extra financial pressure on councils, both through paying their own staff and the costs external contractors will charge to offset their own spending on increased wages.
The changes are expected to cost the County Council around £31 million in the adult social care sector alone in the April 2025 to March 2026 financial year.
This cost will come from the council’s external providers as a consequence of the Chancellor’s budget.
Between £10 million and £16 million of this is estimated to result from the effect of National Insurance changes alone.
This is in addition to the anticipated extra cost of £4.5 million the council will face as an employer of its own staff due to National Insurance changes.
The council estimates that the amount of extra funding from the government will fall below what is needed to maintain current service levels.
Speaking on the increases during the meeting, Cllr Neil Clarke (Con) said:
“If that has an impact on jobs and economic growth – which it’s likely to do – it could well mean there’s extra pressure on benefits, health and wellbeing, and employees may end up losing their jobs with the number of employees having to reduce.
“It doesn’t assist with the mental stress and health and wellbeing of our residents.”
The council’s revised funding shortfall over the next three years is expected to be £64 million, with the current in-year funding shortfall forecast at £4.4 million.
Current leader of the County Council, Ben Bradley (Con), said during the meeting:
“We had a gap – we now have a bigger gap – ours is far more manageable than most.
“The number that has been set aside to allegedly cover employer National Insurance in the public sector doesn’t look anything like a big enough number to actually cover the impact of employer National Insurance.”
A spokesperson for the council said:
“The Cabinet Member for Finance & Resources, Councillor Richard Jackson, today announced that the latest unpublished forecast would already show this gap reducing to £2m and that he has confidence this predicted overspend will reduce further as we progress through the rest of the year.”
The council will work on their Medium Term Financial Strategy to find ways to generate additional income to offset budget gaps until 2029.
The cabinet did not confirm any increase in council tax today, but an increase could help bridge funding gaps.
Richard Jackson, Cabinet Member for Finance, said:
“We recognise the cost of living issues that everyone’s dealing with – whether it’s council tax increasing or a charge for services – all of those increases we will keep to an absolute minimum.”
A formal settlement figure from the government will be given to local authorities in December, after which councils will work towards finalising official budgets by next February.
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