Senior councillors have expressed “deep concerns” over the potential impact of National Insurance and inflation rises – with council running costs set to go up.

In September 2021, the UK Government announced National Insurance would be raised by 1.25% from April 2022 – this, combined with a 5.1% year-on-year inflation rate, will increase the council’s running costs by a further £8.7m, cabinet members have warned.

Labour councillor Philippa Marsden, who is the leader of Caerphilly County Borough Council, said she was “deeply concerned that this double whammy of tax rises imposed by Boris Johnson’s Conservative Government and high inflation will have an extremely punishing impact on the Council’s budget”.

Cllr Marsden added: “The Council is the largest employer in the County Borough, and together with high inflation – which makes everything more expensive for residents, businesses and the council itself – this is going to hit us hard at exactly the wrong time.”

Before Christmas, the Welsh Government announced its provisional local government settlement, which will see Caerphilly County Borough receive 8.5% more funding for 2022/23 than in the previous year.

The council will receive around £317.5m core funding from the Welsh Government – an increase of £24.7m.

The settlement – which is the block grant received each year from the Welsh Government  – makes up the bulk of all council income.

Cllr Marsden said the Welsh Government settlement would be a “key lifeline” for councils across Wales, but added: “Much of the increase in funding our residents would have benefited from will be wiped out by these cost increases, in part imposed on us from Westminster.”

Cllr Eluned Stenner, the council’s Cabinet Member for Performance, Economy and Enterprise, said the rises in National Insurance and inflation will “put strain on the Council’s budget, with little to offer us in support”.

Cllr Stenner added: “This has come at the worst possible time, but over the coming weeks, as we plan the council’s budget for the next financial year, we will be doing everything we can to protect our residents’ services from these regrettable cost increases.”

A UK Government spokesperson said: ““We recognise people are facing pressures with the cost of living – which is why we’re taking £4.2bn of decisive action to help people across the UK.

“We’re providing extensive support to those on the lowest incomes, including putting an average of £1,000 more per year into the pockets of working families on Universal Credit, increasing the minimum wage and helping with the cost of fuel bills.”

A council joint scrutiny committee meeting will be held on January 24, where the council budget will be discussed.