£20 million Council overspend could rise further if government National Insurance hike hits social care

Oldham Liberal Democrats have warned that the council could be in hot water over its finances if the government doesn’t bring forward funding to cover the hike in National Assurance contributions (NICs) announced by Labour Chancellor Rachel Reeves in October.

From April next year employer’s National Insurance contributions will increase by 1.2% and the threshold at which employers must contribute to National Insurance will be reduced to all employees earning £5,000 or more. The announcement has sparked fresh concerns over council finances due to increasing pressure on social care providers.

Saddleworth West and Lees representative and Oldham Liberal Democrat Spokesperson for Finance, councillor Sam Al-Hamdani said, “Social care makes up a significant proportion of council spending and councils are required by law to ensure that services are delivered for those who need them. If the government doesn’t shield care providers from their National Insurance hike, those costs will be passed on to councils like Oldham. That could force some councils over the edge of the cliff.”

Oldham Council already faces a £20 million overspend with most council insiders hinting that the Labour administration is set to cut even deeper in February’s Budget.

Liberal Democrat Leader of the Opposition councillor Howard Sykes said, “The Labour Government needs to bring forward funding to protect councils from their National Insurance hike.  We are nearing the brink now.

“We’ve heard a lot from Labour over the last 14 years about how they would fix local government. If they don’t act soon, many more councils will go under. I don’t want that for Oldham.”