Plymouth Hit by Huge Tax Increase Threatening Balanced Budget

Plymouth Council faces a £2 million cost due to a new rise in employer taxes. The tax, called National Insurance, increased by 1.2% in April, and a councillor thinks this stops a balanced budget. The council must set its budget on Monday.

Steve Ricketts, an independent councillor, will vote against the proposed budget and opposes a planned 5% council tax rise. Council documents showed a £2.3 million cost for the council, covering directly employed staff.

The government may offer some money, but Plymouth does not know how much it will get. The council assumes it will pay an extra £2 million, and Ricketts said the tax hurts local councils a lot.

Ricketts opposes the budget, thinking it is the worst in 20 years. He sees wasted money and a tax increase, and the council expects people will struggle.

The government set aside £515 million for councils to help cover National Insurance costs. Plymouth doesn’t know its share yet, but the council calculated a £2.3 million impact and expect to get about £2 million back.

A group, the LGA, says councils face a £637 million shortfall because of the National Insurance increase. The LGA claims suppliers could add £1.13 billion in costs.

The LGA welcomes the £515 million package but says it falls short by £637 million. Councils might need to raise taxes and cut services, and the government admits some councils will suffer.

A minister, Jim McMahon, calls the funding “good, but not perfect.” Oxford Council will get £300,000 from the government, while their National Insurance will increase by about £1.4 million.