NI increase is 'drain' on council, government told

Oxford City Council will receive £300,000 in compensation from the government

The government has been criticised by a councillor for creating a "drain of money back to Westminster" by increasing employers' national insurance.

Local authorities across the UK will be hit by the 1.2% rise in employers' national insurance, which was announced in Chancellor Rachel Reeves' autumn budget, and comes into affect from April.

Oxford City Council will receive £300,000 in compensation from the government to cover the additional costs.

The increase in national insurance is expected to cost the authority about £1.4m.

Chris Smowton, leader of the council's Liberal Democrat group, said: "This is in effect roughly a £1m a year drain of money from this city back to Westminster, and one that was heavily eluded would be compensated for.

"It is stunning that government would choose to crater local councils' services and financial stability by forcing them to effectively send their funding straight back to Westminster in tax," he added in a statement.

Oxford City Council is lead by a minority Labour administration.

Ed Turner, the council's finance chief, said the compensation was "disappointing and not as much as we hoped for", but said government funding in other areas would leave the council in a better position overall.

"We acknowledge that the government does not have a lot of money going around at the moment," he added.

The government have given the city council £600,000 in homelessness prevention funding, as well as £1.8 million in enhanced producer responsibility.

Mr Turner said: "We got more on the swings than we lost on the roundabout."

The government admitted that some councils would be worse off due to the national insurance increases, despite the increased funding for local authorities.

Communities minister Jim McMahon MP said the funding settlement was "good, but not perfect".