'No more excuses' as UK Treasury to hand Scottish Government £300m to cover National Insurance hike
by Chris McCall, https://www.dailyrecord.co.uk/authors/chris-mccall/ · Daily RecordGet the latest Daily Record breaking news on WhatsApp
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The UK Treasury is to hand the Scottish Government an extra £300m to cover the cost of a National Insurance hike on employers.
The cash - which will be given by the end of the financial year - will help cover public sector bodies who are now liable to pay more tax following last month's Budget.
But Shona Robison, the SNP Finance Secretary, today warned the additional money would not cover even half of the additional costs passed down to employers such as the NHS.
A higher percentage of the Scottish workforce is employed by the public sector than the rest of the UK, meaning the NI hike is a headache for ministers at Holyrood.
Public sector wages are also higher on average than south of the Border.
Robison is currently putting the final touches to the Scottish Government's draft Budget before it is announced on December 4.
A UK Government source insisted there was now "hundreds of millions of pounds" heading to Holyrood.
They said: "In total Holyrood will have more than £5bn extra to spend as a result of the UK budget.
"There are no more excuses, Scots expect delivery from the SNP and to use this money to reduce NHS waiting times and raise attainment in our schools - not fill in a budget black hole created by years of financial mismanagement and waste."
But Robison insisted the Scottish Government would be hit hard in the pocket.
“The Labour Government’s decision to hike national insurance contributions was taken without any prior consultation, or meaningful notice, being given to the Scottish Government," she said.
"Labour’s decision will lead to substantial additional costs for small businesses in the private sector, and for organisations in the public sector, it means the likes of hospices and GP practices face far greater running costs to simply keep their doors open.
Let me be clear that £300 million simply won’t cover the cost of this hike for the public sector in Scotland.
"The calculated cost of this decision for Scotland’s directly employed public sector is well over £500 million - and when costs include the likes of childcare settings, colleges, and adult social care, it is around £750 million.
"That Labour are trumpeting that they could reimburse less than half of this sum and expect people in Scotland to celebrate is beyond belief – and shows a complete disregard for public services in Scotland.
"Clearly, the Labour Government expect the shortfall of hundreds of millions to be absorbed by cuts to Scotland’s public services. Let me be clear, that is nothing less than Westminster austerity through the back door.
"Labour need to fully fund their decision to avoid irreparable damage to our public services in Scotland.
"With just over a week until the Scottish Government announces its budget for the coming financial year, we need urgent and formal clarity from the UK Government that they will do so."
Chancellor Rachel Reeves previously announced Scotland would receive £3.4bn in additional funding in 2025-26 when she laid out her Budget plans last month.
The UK Government is now providing extra funds on top of the £3.4bn to make up for the extra staff costs from increased NI costs.
The Scottish government is also set to receive an additional £1.5bn for this financial year, 2024-25 - though it said this was in line with its budget expectations.
NI contributions are the UK's second-largest revenue stream behind income tax.
It is paid by workers and the self-employed on earnings and profits, and by employers on top of the wages they pay out.
About 600,000 people are employed in Scotland’s public sector, making up 22 per cent of the total workforce – compared to about 17 per cent in the UK as a whole.
That has fuelled concerns at Holyrood that Scotland could be short changed if compensation for the National Insurance increase is not proportional to its public sector.
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A spokesman for the UK Government said: "The Budget delivered more money than ever before for Scottish public services and the Scottish Government receives over 20% more funding per person than equivalent UK Government spending.
"It is for the Scottish Government to allocate this across its own public sector and meet the priorities of people in Scotland.
"It will also receive additional Barnett funding on top of this record £47.7 billion settlement as part of support provided in relation to changes to employer national insurance.”
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