LGA – Unfunded increases to the National Living Wage would jeopardize local services and jobs

Paying the planned National Living Wage (NLW) increase for the lowest paid council staff could cost councils at least £400m over the next two years, the Local Government Association said today.

Paying the planned National Living Wage (NLW) increase for the lowest paid council staff could cost councils at least £400m over the next two years, the Local Government Association said today.

In the spring statement, the government reiterated its target for the NLW to reach two-thirds of median earnings by 2024. The most recent forecast released by the Low Pay Commission indicates that the NLW could grow by nearly 20% over the next two years.

The LGA said bringing the salaries of the lowest-paid council staff in line with those forecasts would cost almost £400million. The actual cost is likely to be significantly higher given the impact of the dramatic increase in minimum wage levels on other local government pay levels and the increased cost of commissioned or outsourced services, such as adult social care.

Without central government support to cover the costs, the LGA said councils would not be able to keep pace with the steep increases in NLW without having to take the drastic decision to cut services and/or jobs.

The LGA’s analysis of the NLW is part of a wider set of findings regarding the impact of energy prices and inflation on council budgets this year, to be released at its annual conference next week.

The LGA estimates that 35% of local government staff could end up not being paid more than the NLW by 2024 unless additional funding is secured. This would cover almost all non-teaching staff in schools as well as social workers, library staff, catering staff and entry roles for professions such as planning and environmental health.

Even before the revised forecast for the NLW, a LGA Workforce Survey found that 15% of boards were already considering having to downsize. Six in 10 boards said the ability of their board’s workforce to deliver services was a moderate or significant concern.

Cllr Andrew Western, Chairman of the LGA Resources Council, said:

“Councils know that this year will be difficult for many, especially those on the lowest incomes. Supporting those with the lowest salaries is not only fair, but improves the motivation, loyalty, productivity, and retention of hard-working council staff.

“However, staff salaries represent a huge share of council costs and it is clear that the rising cost of living is going to have a huge impact on salary pressures for local government. The planned steep rise in the National Living Wage – if not funded – would hit council budgets hard and put services at risk.

“Only by fully funding the cost can central government ensure that councils can continue to protect vital services – such as adult social care, homeless help, rubbish collection and filling potholes – and the jobs of the public sector workers who supply them.”

Notes to Editors

  1. The Local Government Association will hold its annual in-person conference June 28-30 in Harrogate. Speakers will include the upgrade secretary Michel Goveeducation secretary Nadhim ZahawiShadow Upgrade Secretary Lisa Nandyliberal democrat leader Mr. Ed Davey and peer cross Baroness Lola Young.

Please visit our Annual conference website to see the full program. To reserve your place, contact greg.burns@local.gov.uk for a media promotion code to get a free pass.

Michael A. Bynum