National Insurance Rise to Cost Wandsworth £3.4million

Council rejects call to ask for extra funding to plug gap in finances

The rise in the employer's contribution takes place in April

December 9, 2024

Wandsworth Council has rejected calls to address the impact of upcoming changes in employer National Insurance contributions (NICs), despite facing an extra £3.4million in staff costs. Labour-run Wandsworth Council was urged to ask for extra cash, and to reassess its costs and strategies, due to announcements made in the Budget.

Chancellor Rachel Reeves confirmed NICs will rise to 15 per cent in April 2025 in the Budget. The threshold at which employers begin paying this levy will fall to £5,000. Employers currently pay NI at 13.8 per cent on employees’ earnings above a threshold of £9,100 a year.

A report by Conservative councillor Peter Graham, opposition speaker for finance, said these changes will have a ‘significant impact’ on Wandsworth Council services, including a confirmed £3.4m increase in direct payroll costs and an unknown hike in the cost of providing social care. He said the authority has not set out actions to address the impact on charities and external suppliers.

Councillor Graham called on the council to write to Ms Reeves on behalf of businesses, charities, care providers and other groups in Wandsworth to ask for help with extra costs brought about by the changes to NI rates. He also asked the authority to urgently assess the impact on its contractors and external suppliers, particularly in social care, and to review its strategy for the voluntary sector and grants programme.

The report said, “The Autumn Budget has put many businesses and organisations in Wandsworth under financial pressure. It will also have a significant, negative impact on the council’s own finances, which may not be offset by its settlement from the government.

“The response to these problems has appeared muted, with no visible reassessment of costs or strategies. The report’s recommendations would begin this process and support the interests of the borough.”

But the council’s finance committee rejected the demands on 4 December, with four councillors voting in favour and five against. The committee did not discuss the report further.

Charlotte Lillywhite - Local Democracy Reporter