Falkirk Council leader says National Insurance rise a 'stealth tax' that will hit local services

Get the latest Daily Record breaking news on WhatsApp

Our community members are treated to special offers, promotions and adverts from us and our partners. You can check out at any time. More info

Join us on WhatsApp

The SNP leader of Falkirk Council says the UK government's National Insurance rise for employers is a "nothing more than a stealth tax on the public sector" that will hit local services.

At the final Falkirk Council meeting of 2024, Cllr Cecil Meiklejohn told members that the NI rise for employers was estimated to cost as much as £700 million, once the impact on third sector organisations across Scotland was taken into account.

In a motion to council, she asked members to agree to write to Chancellor Rachel Reeves, requesting that she fully reimburse the cost of the rise in National Insurance for the council.

Read more: Cuts to Falkirk school hours will not go ahead as councillors reject plans

The SNP plea followed the UK Budget on October 30, when the Chancellor raised the rate of the employer national insurance contributions from 13.8 per cent to 15 per cent – starting on April 25.

At the same time the threshold at which employers start to pay National Insurance contributions was lowered from £9100 to £5000.

While the UK Government has promised £300 million of funding to mitigate the rise for the public sector, the SNP believes this "falls way short of what is actually required".

Cllr Meiklejohn told the meeting that the tax will "punish Scotland" which has a larger and better paid public sector, with many more employed indirectly.

She added: "The estimated direct costs to Falkirk Council could be as high as £7 million, with the prospect of this figure increasing as the full impact is realised.

"If it is not fully mitigated, that will be a further pressure that will need to be funded from cuts in services or an increase in council tax, neither of which is acceptable."

SNP councillor Gary Bouse said: "If it looks like a stealth tax and sounds like a stealth tax, guess what - it probably is a stealth tax!"

He said that businesses - and therefore workers - would also be affected by the hike, stifling growth by keeping inflation high.

But the Labour group leader, Councillor Anne Hannah, said: "The UK government on the 30th October announced a £5 billion increase for the Scottish Government for public services.

"Everyone in this room will be aware that if you put more money into public services, the money has to come from somewhere - it has to be paid for.

"The UK government has chosen this route to raise the funds to enable investment in public services and we on the Labour benches are committed to investment in good public services."

Her colleague Jack Redmond said: "No rise in employers National Insurance contributions means no additional £5 billion coming to Scotland, which means no additional funding for the NHS or our IJB or indeed to this council, meaning we will be on the same course set by the Conservatives over the last 13 years."

Cllr Redmond said the impact of the Conservative's austerity could be seen in "the erosion of public services, leaving schools, hospitals and social care systems over-stretched and underfunded".

"Yet despite the promises of balancing the books, they never once came close to a budget surplus," he added.

Conservative James Bundy said that the NI rise for employers would have "damaging consequences across the private sector".

"It's a short-term, short-sighted approach by Labour, which is no surprise," he said.

The Conservative group agreed to back the SNP motion on condition that they added a recognition that the NI rise for employers would also have a negative effect on private businesses, which was agreed.

Three Independent councillors abstained from the vote, questioning the point of debating UK policy in the council chamber.

For more Falkirk stories, sign up to our newsletter here.

Story SavedYou can find this story in  My Bookmarks.Or by navigating to the user icon in the top right.