Angus Council faces a £5 million budget “hammer blow” over a hike in employers’ National Insurance contributions.
The figure is millions of pounds more than forecast as the authority prepares to set its budget later this month.
And it will add to a predicted £9.5m black hole for 2025/26.
The funding gap has already led to warnings of a significant council tax rise and service cuts for Angus residents.
Monifieth and Sidlaws SNP councillor Lloyd Melville revealed the additional cost of National Insurance changes ahead of the budget-setting meeting on February 27.
The UK Government previously announced employer contributions would increase to 15% from April.
National Insurance impact previously forecast at £3m
In December, council finance director Ian Lorimer put a £3m estimate on the cost to the council.
He now predicts it will be £5m – and could still go higher.
The forecast does not include potential price rises passed to the council from contractors because of the hike.
Costs to Angus Health and Social Care Partnership are also unknown.
This week, Mr Lorimer told Mr Melville: “Our current best estimate of the cost of the change to the employer National Insurance rate and threshold for the council’s directly employed staff is £4.3 million.
“We estimate a further £0.7 million in costs will arise in relation to Tayside Contracts (Angus share) and Angus Alive, giving a total estimated additional impact of £5m.
“The £5m excludes the estimated cost impact on Angus Health & Social Care Partnership.
“The impact, especially on services the partnership buys in from providers of care services, is expected to be significant.”
Mr Lorimer added: “Figures I quoted at the council meeting in December were very much a preliminary estimate.
“In the absence of detailed modelling they were, at that time, based on an assumed impact of the National Insurance changes adding somewhere between 2 and 2.5% onto our gross pay costs.”
60% Holyrood help for NI rise
Earlier this month, the Scottish Government announced it would compensate councils for 60% of the rise, providing an additional £144 million.
Mr Melville said: “The people of Angus deserve the facts about the significant challenges facing us.
“Rachel Reeves has struck a £5 million hammer blow to Angus Council’s budget, making it harder for us to deliver services for our communities.
“The 60% compensation announced by the Scottish Government is welcome – but this hike was a choice made at Westminster.
“The UK Government must see sense and fully compensate the public sector for this reckless decision.”
This week, the House of Bruar said the National Insurance increase would contribute to a £1m wage bill increase.
The Highland Perthshire company employs more than 350 people.
It enjoyed a record year in 2024, but said rises to the national living wage and employer’s National Insurance contributions would increase costs.
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