NALC statement on compensatory funding for health and social care levy

On 7 September 2021, the prime minister announced plans to increase funding for health and social care over the next three years through a new levy based on National Insurance contributions (NICs) paid by employees, employers and the self-employed.

The Build Back Better: Our Plan for Health and Social Care command paper states that “the government intends to compensate departments and other public sector employers in England at the Spending Review for the increased cost of the levy”.

However, the National Association of Local Councils (NALC) has been advised by the Department for Levelling Up, Housing and Communities that England’s 10,000 local (parish and town) councils will not receive compensatory funding for this additional cost burden, estimated to be several millions of pounds.

Cllr Sue Baxter, NALC chair, said: “Yet again England’s 10,000 local (parish and town) councils are being overlooked for government funding.

“I’m extremely disappointed that while the rest of local government will have the additional cost of the new health and social care levy covered by the government, local councils will not. 

“It is simply wrong that the first tier of local government is being treated differently to other tiers of local government.

“This additional cost burden for local councils is likely to run into several millions of pounds, potentially forcing local councils to consider meeting this new cost burden by increasing their share of council tax and thus passing on the cost to residents.

“That is why I am strongly urging the government to think again about this approach and I am keen to discuss this with ministers as a matter of some urgency”.