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Government’s minimum wage increase adds £5m in costs to Nottinghamshire County Council budget

Around £5m in costs have been added to Nottinghamshire County Council’s budget after the Government increased the national minimum wage.

The minimum wage will increase by more than a pound to £11.44 per hour from April next year.

It is currently £10.42 an hour for workers over the age of 23.

County Hall in West Bridgford, the headquarters of Nottinghamshire County Council.
County Hall in West Bridgford, the headquarters of Nottinghamshire County Council.

Richard Jackson, cabinet member for finance at the Conservative-run council, told the Local Democracy Reporting Service the increase had added around £5m to the 2023/24 budget.

The authority had already been anticipating a significant budget shortfall over the next three years.

By 2026/27 it is forecast to spend £60.2m more than its predicted income.

Inflation and an increase in social care expenses are being blamed for the gap.

“We are still confident the figure will reduce towards finalising the budget,” Mr Jackson said.

“We haven’t done the full calculation. So many bits are changing on it and there are so many different parts to the calculation, but we know the living wage has added about £5m of costs.

“When all the departments look for additional funding for next year, we analyse the business case for additional funding and some of that is reducing, and there is also the biggest unknown which is the local government finance settlement which is probably going to be December 19.

“Things are moving in the right direction. We expect £60.2m as a high point and, as per previous years, we will push that figure down over the next couple of months.”

Nottinghamshire County Council said while it faces a budget gap, it was not in a position where a Section 114 notice would need to be issued.

A Section 114 notice is the closest an authority can legally get to declaring bankruptcy.

Numerous councils with social care responsibilities have either been issuing Section 114s, including Birmingham City Council, or warning that it is a possibility, like Nottingham City Council.

Nottinghamshire County Council
Nottinghamshire County Council

Mr Jackson said the rising costs pose a good argument for an increase in local government funding from central Government.

Councils typically find out how much funding they will receive in December, in the form of an annual settlement.

The timing has before been criticised as failing to give authorities enough time to plan.

“I think the whole sector has got a good case for increased funding,” Mr Jackson added.

“I think county councils and all upper tier local authorities, or anyone with social care functions, have got a very good case for additional funding.

“There is some additional funding going into the [Department for Levelling Up, Housing and Communities] in the Autumn Statement, although it is not clear how that is to be carved up. That is what we are waiting for really.”

In his Autumn Statement Chancellor Jeremy Hunt said the minimum wage rise will apply to those aged 21 and 22 for the first time, too.

It means a full-time worker aged 23 on the wage would receive a rise worth £1,800 a year, and a 21-year-old would see an effective £2,300 annual rise.

The separate wage for 18 to 20-year-olds will also increase to £8.60 an hour from £7.49.

In total the above-inflation wage increases will benefit 2.7 million low-paid workers.

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