Councils still face £100m bill to cover national insurance hike, says Cosla

Councils have been left with a near-£100 million bill to cover the increase in national insurance, the local authority body has said.

Finance Secretary Shona Robison announced on Tuesday the Scottish Government would cover 60% of the increase caused by the hike in employer contributions announced by the UK Government.

But the resources spokeswoman at Cosla has said that leaves authorities with a £97 million funding gap to fill, as numerous ministers have spoken against high increases in council tax.

“We note that the Scottish Government has announced it will fund 60% of the additional direct staffing costs that will result from the UK Government’s policy decision rise to employers national insurance,” said Katie Hagmann.

“However, this leaves the remaining 40% with no additional funding – leaving a gap of £96 million councils will still need to fill within their budgets.

“While we acknowledge that the UK Government is still to announce additional resources, it is important to note that there has been no additional funding for commissioned services, the biggest of these being adult social care, which are also vital services and will see significant impacts.

“Given the mounting challenges for local government, this additional funding will not solve the crises councils and communities are facing, which are exacerbated by the employers national insurance increase.

“Difficult decisions will still need to be made as councils look to protect essential frontline services.”

According to Cosla, the cost to local government is equivalent to a 3.3% increase in council tax.

The Scottish Government has called for funding from Westminster to fully cover the impact of the increase on Scotland’s public sector, which employs more people per head of population than elsewhere in the UK.

But the UK Government has repeatedly said the funding will be a population share, which could leave the Scottish public sector with a bill rising into the hundreds of millions.

The Finance Secretary said: “We recognise the challenging situation the UK Government’s rise in national insurance presents for local authorities, which is why we are providing £144 million to support the cost of these changes inflicted on the public sector by the UK Government.

“This is the equivalent of a 5% national increase in council tax, and is additional to the record funding already provided, which includes a billion pound increase from last year.

“The Scottish Government will continue to press the UK Government to fund the costs of its policy to the public sector in full and hope that Cosla will continue to support those efforts.

“We need an urgent decision on this to give public sector employers, including the NHS, police and local authorities, clarity to inform their spending decisions.”

A UK Government spokesman 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.”