Edinburgh City Council could face £35m bill amid changes to National Insurance contributions

Edinburgh City Council could face more than £35m in extra costs across all services due to changes introduced by the UK Government to National Insurance contributions.

A new report set to go before councillors next week has set down the cost of asking employers to pay more towards their worker’s contributions across the local authority and its arms-length services.

It reveals that the council is facing an £18.9m increase in its staffing bill, with a further £16.7m impact on indirect services, including nearly £3m in extra staffing costs for Edinburgh Leisure.

The report acknowledges that it is still waiting to hear if the Scottish Government will cover the additional costs for councils.

However, it warns that the indirect services affected may not be covered by any additional funding provided to local authorities to cover the costs.

In its first budget the UK Labour Government increased the percentage of National Insurance employers must pay for its staff as well as reducing the threshold for when it kicks in.

A report to Edinburgh City Councillors says at its own finance committee meeting last November, it had noted that the Scottish Government would receive additional funds from the increases and “can and should” use part of it to increase funds to local authorities to help cover the costs.

However, it said the situation was unclear, particularly regarding arms-length services like Edinburgh Leisure and indirect services such as contracted and commissioned services and external providers.

The report details the costs of the changes, which have been calculated by staff, and warns that any news of funding coming to fill the gap may not be confirmed in time for the council to set its budget for the year ahead.

It says: “As of the time of writing, the Scottish Government has not received confirmation from the UK Government as to the specific level of additional funding to be made available to offset increased costs arising from these changes.

“It has been suggested that this confirmation might not be received until the time of the UK Government Spring Forecast in late March after the point at which councils are required to set their budgets for the coming year.

“Given this, COSLA and the Scottish Government have agreed to lobby jointly both for earlier confirmation of compensating funding and to address, in full, the direct and potential indirect impacts of the changes. A verbal update will be provided at the meeting.

“In the meantime, the convener of the finance and resources committee will write to COSLA, the Scottish and UK Governments pressing for the full direct and indirect impacts of the changes to be recognised and corresponding funding to be passed to the Scottish Government and thereafter to Local Government.”