07-05-2025
- Business
- Powys County Times
Powys Council may have to fund national insurance rise
POWYS County Council may have to dip into its reserves to pay higher staff national insurance costs - but neighbouring councils in England won't.
Last month it was revealed that the NI hike will leave Welsh local authorities with a shortfall with estimates ranging from £20 million to £65 million.
Funds have been allocated to English councils to cover the higher costs, but because of the way the Barnett Formula allocates Treasury funding to devolved nations, Wales is not expected to receive the full cost of the NI hike.
English local authorities have suffered deeper cuts to services than Welsh ones – and as such have less services and staff to fund.
Plaid Cymru group leader, Cllr Elwyn Vaughan asked: 'All public bodies in England will be protected against the national insurance increases cost.
'However, they have decided to fund Wales via the Barnett formula - a decision that is leaving Wales £65 million short of funding.'
Cllr Vaughan asked: 'What effect will this have on Powys Council financially?'
Interim head of finance Ann Phillips answered: 'Although we are aware that the funding is being transferred through the Barnett Formula, and there may be a shortfall, we do not have any detail about the overall quantum and what it is expected to cover.'
Ms Phillips explains that as part of this year's budget setting process money has already been allocated to pay for the growth of national insurance costs for social care providers.
Ms Phillips said: 'But we expect funding from Welsh Government to cover the cost of our directly employed staff.
'We have specific reserves set aside for payroll pressures, and this would need to be drawn against if there is a budgetary shortfall.'
Ms Phillips added that as soon as the council has clarity on what will be funded or not, the finance department will work out what the overall financial impact to the council will be.
The last financial report for the 2024/2025 budget as it stood at the end of February, the council had a total of £55.259 million in usable reserves.
In April, the new class one national insurance costs for employers increased from 13.8 per cent to 15 per cent.
