Increases in the National Living Wage (NLW) could cost councils at least £400m over the next two years and cause service and job cuts, according to the Local Government Association (LGA).
In the Spring Statement, the government confirmed that it wanted the NLW to reach two-thirds of median earnings by 2024. Forecasts from the Low Pay Commission suggest this could mean an increases of almost 20% in the NLW in two years.
The LGA said that bringing the pay of the lowest-paid council staff in line with these forecasts would cost almost £400m. It warned that without additional government funding councils will be unable to keep up with the cost of the NLW increase, which would put council staff and local services at risk.
Cllr Andrew Western, chair of the LGA’s resources board, said: “Staff pay makes up a huge proportion of councils’ costs and it is clear that the rising cost of living is going to have a huge knock-on impact on pay pressures for local government.
“The forecasted sharp rise in the NLW – if unfunded – would hit council budgets hard and put services at risk.”
The LGA estimated that 35% of local government staff could end up being paid no more than the NLW by 2024 unless additional funding is secured.
Western added: “Only by fully funding the cost, can central government ensure councils can continue to protect vital services – such as adult social care, homelessness support, collecting bins and filling potholes – and the jobs of the public sector workers that deliver them.”
—————
FREE weekly newsletters
Subscribe to Room151 Newsletters
Room151 LinkedIn Community
Join here
Monthly Online Treasury Briefing
Sign up here with a .gov.uk email address
Room151 Webinars
Visit the Room151 channel
