A hike in employer national insurance contributions could cost the council budget tens of millions of pounds it has been warned.

The chancellor Rachel Reeves will reveal her first Budget next week and it is expected she will charge National Insurance on the amount employers pay in pensions as part of measures to plug a £40bn black hole.

Labour promised in the election not to raise taxes on working people and speculation has grown over what levels Reeves will pull to raise extra money.

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It is expected to bring in £15bn to the Treasury.

In Glasgow, the council is one of the biggest employers in the city with 27,362 staff.

While tax rates and thresholds are devolved to the Scottish Parliament, National Insurance is reserved to Westminster and the Chancellor’s decision would affect Scotland.

In Glasgow, the person in charge of the council’s budget said public bodies need to be exempt from this move.

A rise in employer contributions of just 1% would cost the council £13m and were Reeves to increase it by 2%, the council would need to find £26m from next year’s budget.

Already the council is dealing with cuts of £107m over three years to balance the budget.

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Ricky Bell, City Treasurer, said the city can’t take any more cuts or added costs.

(Image: GCC)

He said: “There’s a real and growing sense of dread around next week’s UK Budget and what the Labour Government’s plans may mean for citizens and services.

“The Chancellor needs to quickly give assurances that our public services will be protected from the real terms cuts which would result from an unfunded rise in employer National Insurance contributions.

“For Glasgow City Council’s budget alone, a rise of just 1% translates as a real term cut of £13Million. A 2% would be catastrophic for our finances and the services the public relies on.

“In a world where citizens are relying more and more on the services we deliver and with budgets toiling under 14 years of austerity and rampant inflation, our public bodies simply could not withstand an unfunded hike.”

Bell is calling on Labour to make their feelings known to the Chancellor and to ensure if there is a rise then public authorities are exempt or compensated to fund the rise.

There is speculation that could be the case and would cost £5bn to do so.

He added: “It’s incumbent on everyone with any influence on the Labour Government to make their voices heard and insist this doesn’t happen.

“I’ve called on the Glasgow Labour and his lead on finance to write immediately to their party colleagues at Westminster demanding that any hike is fully funded.”

John Swinney, First Minister, has recently called for compensation for the public sector should NI rise for employers.

Swinney warned an increase would mean higher taxes for councils and the health service.

He said: “Do not make Scotland’s public sector pay for this increase in taxation.”