British city hit with £350,000 black hole after Rachel Reeves Budget attack

A ‘Northern Powerhouse’ city has vowed not to axe library and leisure centre staff despite Rachel Reeves’ National Insurance (NI) and wage increases leaving them with a cash crisis.

Salford Community Leisure (SCL) runs arts galleries, museums and sports facilities on behalf of Salford City Council but has been struggling to keep up with recent soaring costs of wages, NI and inflation.

Now the authority has had to bail out the company with £350,000 to cover management costs this year – as a new council report reveals next year they may need a staggering £1.5m.

There have been major concerns about rising National Insurance taxes on employers from Rachel Reeves’ poorly received Budget as – along with higher energy and food prices – they are hitting business and consumer confidence.

In Salford, Greater Manchester, the council has vowed that library and leisure centre staff will not be cut and opening hours will not be affected despite SCL’s major financial problems.

A fresh report this week from Salford City Council lays bare just how SCL is struggling to keep up with crippling, rising costs.

The “significant” problems stem from staffing and running costs going up, with recent pay awards costing the company £2.3m over the last three years.

Employer national insurance increases will cost SCL an additional £350,000 from April, alongside a yearly repair overspend of £50,000 “and additional pressures” from a fire last year at Clarendon Leisure Centre.

The city council has now agreed to bail out the company with a one-off payment of £350,000 to cover management costs this year, but as much as £1.5m could be needed as soon as next year.

SCL’s reserves – cash set aside for a rainy day – have been “wiped out” to cover the rising running costs, the report stated, leaving the firm in a “critical” situation.

It is hoped cash from the council will help SCL to start building its reserves back up and get to a point where it can make enough money to cover costs.

A council officer said the city’s libraries and leisure services are “areas of review” for the future, but the council stressed there is currently no talk of changes to opening hours and staff levels.

The officer added the council has set up monthly meetings with the company to try and turn things around.

Coun Hannah Robinson-Smith, Salford council’s cabinet member for culture and sport, explained: “We are committed to continually improve the city’s leisure and cultural places and spaces, which will help to increase the number of people participating in positive activities in our city.

“While there are financial pressures, like many councils are currently managing, our leisure centres, libraries, community centres, and museums and art galleries are of significant importance for the physical and cultural wellbeing of all our diverse communities.

“This payment reflects the council’s dedicated support for SCL, and we will continue to work closely with them to deliver services on behalf of Salford City Council.”

Rachel Reeves announced a near-£70bn increase in public spending in her first Budget last October, with more than half coming from higher taxes.

Businesses are bearing the brunt of these tax increases, due to the Chancellor deciding to increase the rate employer’s pay in National Insurance, as well as reducing the threshold they start paying it at.

It sparked a furious backlash, with firms warning not just higher taxes in April, but higher minimum wages, higher business rates, as well as costs associated with new workers’ rights, could impact jobs and pay – and ultimately hit the government’s goal of growing the UK economy.

But Reeves told the Confederation of British Industry (CBI) her Budget provided the “stability and the platform that we need to move forward”.

She said at the CBI conference: “I faced a problem, and I faced into it…we’ve put our public finances back on a firm footing, and we’ve now set the budgets for public services for the duration of this Parliament.

“Public services now need to live within their means because I’m really clear, I’m not coming back with more borrowing or more taxes.”