Local Senedd Member for Monmouth, Peter Fox, has written to the Leader of Monmouthshire Council to raise concerns about the impact of a £72 million shortfall in employer National Insurance (NI) funding on council budgets. The shortfall follows the decision by Labour Chancellor Rachel Reeves to increase employer NI contributions without passing on full funding to local authorities.
The NI increase means employers must now pay more to employ staff – whether they’re small businesses or large public sector bodies such as local councils. At the time, Labour’s Finance Secretary, Mark Drakeford, gave assurances that Wales would receive additional funding to cover these higher costs in the public sector. In November, he said:
“The Treasury has said today that there will be additional funding for public sector workers to cover the costs of employer national insurance contributions… it will provide full funding to deal with the national insurance contributions of employers in those circumstances.”
However, earlier this week, Mr Drakeford revealed that the UK Government would not, in fact, pass on the full funding – leaving a £72 million shortfall across Wales’s public services.
Local MS for Monmouth, Peter Fox, has said:
“Mark Drakeford assured us that these tax increases would not fall on the public sector, so last week’s news was bitterly disappointing.
“Local authorities will now face a difficult choice: either cut vital services or raise council tax to cover the extra costs.
“I’ve written to the Leader of the Council to ask what effect this funding gap will have on the council’s ability to maintain essential services such as social care, bin collections, and road maintenance.
“My fear is that, without this support, Monmouthshire Council will be forced to make further cuts. This situation has arisen entirely because of Labour’s Jobs Tax and a Treasury decision that once again shortchanges Wales.”
