Lancashire 'shortchanged by £3m' over national insurance rise, county council deputy claims

Alan Vincent told a recent cabinet meeting the bill the county council was facing as a result of the forthcoming hike in employer national insurance contributions came to more than £11m.

He said the government had initially offered County Hall £7.1m in additional funding and, although it had now upped that to £8.1m, it still left the Conservative-run authority with a “shortfall” that it will have to cover from its own coffers.

The government has pledged £502m in financial support for local authorities across England in order to offset the national insurance rise which comes into force in April. It says the amount was based on “a national assessment of the costs for directly-employed staff across the public sector”.

Grant allocations to individual councils have been calculated using a formula which takes into account an authority’s expenditure on so-called “in-scope services”. The government has also said the money will be “unrinfenced”, so local authorities can spend it however they see fit.

Responding to the claim made County Cllr Vincent had been shortchanged, a Ministry for Housing, Communities and Local Government spokesperson said:

“We recognise the challenges that councils are facing, which is why we are providing an additional £2 billion of grant funding to councils, including £502 million to manage the impact of employer National Insurance Contributions changes on council budgets.

“As announced in the final Local Government Finance Settlement, we are injecting £69 billion of funding into council budgets across England to help them drive forward the government’s Plan for Change, including a £83.9million increase for Lancashire County Council.”

Meanwhile, Lancashire County Council’s cabinet member for adult services has blasted the fact social care providers are not being compensated for the rise in their national insurance bills.

Graham Gooch said it would have a damaging impact on an already under-pressure sector, which the authority had previously tried to help by increasing the fees it pays to help them cover the costs of inflation and increases in the minimum wage.

But, he added, “we cannot afford to pay their taxes”.

“When health and social care are meant to be integrated, it is incongruous that health, which is run by the government, is excused tax rises, whereas the care system is burdened with them - and this despite being under the same secretary of state,” County Cllr Gooch said.