Tory councillors accuse Government of £35m ‘stealth tax’ burden on Nottinghamshire taxpayers

Last month, the first Budget of the new Labour Government saw the Chancellor raise national taxation by a £40 billion, including increases to employers’ National Insurance expected to raise £25 billion per year.

In a motion to be presented at a full meeting of Nottinghamshire Council on December 5, Coun Richard Jackson (Con), cabinet member for finance, states: "Nottinghamshire Council is concerned that the Chancellor’s increases to employers’ National Insurance and the National Living Wage will cause a £31m increase in pressures on our budget from care providers, and a further £4.5m direct pressure on the council as an employer.'

Coun Jackson says in total, the Chancellor’s proposals are projected to create an additional £35.5m budget pressure on the council’s medium term financial strategy (MTFS), in effect doubling the £36m budget pressure already factored into the council’s MTFS when its previous budget was approved in February 2024.

The Chancellor placed great emphasis on some new grant funding for councils, particularly for social care and special educational needs, which amounts to around £19m of ‘new’ money for the council.

However, the council says around £13m of that amount is forecast to be eroded by inflation, leaving the authority with a gross projected shortfall of almost £65m in its MTFS by 2028.

The Chancellor’s Autumn Budget Book claimed to be providing councils with a ‘real terms increase in total core spending power in 2025-26 of around 3.2 per cent’, but she acknowledged that this includes ‘council tax flexibilities’

Coun Jackson said this was a euphemism for council tax increases.

Two weeks after the Budget announcement, the Government confirmed that the council tax threshold would remain at five per cent for councils with social care service responsibilities, despite the Chancellor already levying £40 billion more in national taxation than was levied by the previous Conservative Government.

In view of Labour’s projected £40 billion of extra national tax income, Coun Jackson’s motion proposes that the council should write to the Chancellor calling on her to allocate, through the Local Government Finance Settlement, sufficient funds to fully cover the extra cost pressures placed upon councils by her National Insurance and National Living Wage decisions, and to invest sufficient further resources through the promised three-year Government Spending Review to tackle the broader unsustainable financial position facing local government.

The motion also presses the Government to deliver on its promise to provide fairer funding by reviewing the local government funding model that has historically underfunded Nottinghamshire and other East Midlands shire councils.

Coun Jackson said: “The Labour Government and Chancellor Rachel Reeves have made a political choice to hammer businesses, particularly through their staggering increase to employers’ National Insurance contributions.

"Unless social care providers are exempted from NI increases and funded for the National Living Wage increase, these new costs will inevitably be passed on to customers, including councils like ours with social care responsibilities.”

“We forecast that the Chancellor’s decisions will add £31m in pressures from care providers on to our budget, and a further £4.5m direct pressure on the council as an employer.

"My motion calls on the Government to do the fair and right thing and fully fund us for those additional costs through the forthcoming Local Government Finance Settlement.

“If the Government fails to do that, then they are forcing us to recover that cost and balance our books through council tax and the Adult Social Care Precept, which would make an absolute mockery of the Chancellor’s commitment ‘to not increase taxes on working people’.

"She would be forcing councils to do her dirty work.

“Nottinghamshire Council is an exceptionally well-run local authority, meaning we’ve been able to protect services like libraries, youth provision and rural bus routes that have long since been cut by other councils.

"We’ve also been able to do that without increasing council tax by the maximum amounts permitted by Government, which is a remarkable achievement.”

“Even so, we still face significant financial pressures like all local authorities, especially those with social care responsibilities.

"The absolute last thing this council and Nottinghamshire taxpayers need is a Labour Chancellor stealth-taxing them by using local businesses and local councils to cover her tracks.

“Thanks to our year-round commitment to efficiency and modernisation I can assure Nottinghamshire residents, even now, that we will not increase council tax by the maximum five per cent Rachel Reeves is recommending.

"However, the extent to which we can keep it below that figure will depend on what proportion of Labour’s £40 billion national tax bounty she reinvests in councils like ours.”

Coun Andre Camilleri, deputy cabinet member for finance, added: "As a County Councillor representing Mansfield, I’m very aware that residents have been feeling the pinch financially in recent times, so we want to keep council tax as low as we possibly can.”

“That’s why it’s vital that the Chancellor and the Labour Government don’t burden this council directly, and through social care providers, with additional costs that will end up being paid by local working people and pensioners.

“I oppose Labour piling billions of pounds of taxes onto businesses anyway, because it will damage economic growth, but if the Chancellor is so keen to tax big and spend big with public money, she should use a portion of her £40 billion slush fund to get councils across the country back on an even keel."