Bulwell councillor admits Rachel Reeves’ budget will cost cash-strapped Nottingham City Council more

However, Coun Ethan Radford (Lab), who represents Bulwell at Loxley House, says ‘on the flip-side’ it will prove a welcome change for workers struggling to live on the minimum wage.

Ms Reeves delivered the Labour Party’s first budget in almost 15 years on October 30, announcing tax rises worth £40bn to stabilise public services and finances.

Rather than hiking the rate of income tax and National Insurance (NI) paid by employees, she said employers themselves will soon have to pay more in NI contributions.

The current £9,100 threshold employers start paying contributions will decrease to £5,000, and the percentage of contributions will also go up from 13.8 per cent to 15 per cent from April.

Additionally, the minimum wage for those aged 21 and over will increase from £11.44 to £12.21 per hour from April, and the rate for 18 to 20-year-olds will rise from £8.60 to £10.

Coun Radford told the Local Democracy Reporting Service: “It will affect the cost of staffing budgets because a lot of our staff are on minimum wage.

“Areas that might see costs rise include external contracts with care providers who employ staff on minimum wage. Those care packages will now cost more.

“There are going to be third-party costs, it might impact some of the budget proposals this year.

“On the flip side for people who have been on minimum wage, the increase will be a very welcome change.

"It will cost the council more but we have to look at the individuals.

“We welcome the increase because it is right people are paid fairly.

"It is right they can cover their living costs. And this increase will be beneficial to the local economy, there will be a noticeable impact.”

Nottinghamshire County Council estimates the costs of the minimum wage increase on the authority’s budget will be in the region of £20m.

However, Coun Radford said the monetary impact of the changes on the city council’s budget was not yet known.

Coun Andrew Rule (Ind), fears the increase on employers’ National Insurance contributions may simply make the authority’s staffing issues worse.

The Labour-led council has often been forced to employ costly agency workers to fill gaps in its workforce.

Coun Rule said: “The budget has added increased pressures with the National Living Wage and employer tax and that is not going to help with the staffing issues at the council.”

The Local Government Departmental Expenditure Limit budget for 2025-26 is set to increase from £11.4bn to £14.3b, including at least £600m in new funding for social care.

The Chancellor also committed to a multi-year financial settlement for local councils.

Previously, settlements had been awarded on an annual basis, with the amount confirmed in December each year – a matter of months before budgets have to be set.

Coun Radford said this failed to give councils adequate time to plan, while settlement figures were often only confirmed once local authorities had largely completed the budget process.

He added: “It could lead to a position where you had gone too far with savings, or not far enough.”

The council is currently facing a £68.7m budget black hole next year and a cumulative £172m by 2027-28.