Stratford District Council: National Insurance rise creates £800,000 gap in finances
The politician in charge of Stratford District Council’s finances has revealed £800,000 has had to be set aside to fund national insurance rises.
Councillor David Curtis (Lib Dem, Stratford Shottery), the district’s portfolio holder for resources, told fellow cabinet members this week that the council’s draft five-year financial plan has had to be adjusted after number crunchers discovered that government grants to cover rises were less than half of the anticipated bill.
As well as setting a budget for each financial year, the council refreshes its medium-term financial strategy (MTFS), the skeleton that the body of each budget is built around. It helps to inform ongoing resourcing decisions and shows the authority can balance its books.
While workers have not been hit directly, the government has put up the rate of national insurance that employers pay by 1.2 per cent and lowered the earnings threshold at which they must start paying to £5,000. It was £9,100.
The district council anticipates this will cost an extra £311,000 per year, all of which it anticipated would be covered by government to shield under-pressure local authorities, but it is now projected that only £150,000 per year will be covered – or perhaps less.
Cllr Curtis said: “The difference between the MTFS originally circulated and the updated version is mainly due to national insurance.
“It was expected that this would be funded in full by central government, however, we now know that the funding is only £150,000 per year.
“If this continues, there will be a shortfall of approximately £805,000 across the MTFS, which is significant.
“Mr (Richard) Burrell (head of resources) has increased the use of funds from the Business Rates Equalisation Reserve in 2028-29 from £2.3 million to £3.1 million to make up the shortfall. That is more than he had hoped to take from that reserve.
“There is also some doubt whether the additional NI support from government will continue at the same level or may be subsumed into the total government grant, and perhaps thereby reduced by other means, so there is an added pressure and uncertainty there.”
The council’s budget will be debated and set at a meeting for all district councillors on Monday, February 24.