UK national insurance hike is inexplicable if growth is target, says Robison
Scotland’s Finance Secretary said the increase was bad for both business and public services.
The UK Government’s national insurance increase is “inexplicable” if ministers want to increase growth, Scotland’s Finance Secretary has said.
Chancellor Rachel Reeves announced in her October budget that employer contributions would rise by 1.2% to 15% while the threshold at which it is paid has also been reduced.
UK ministers have set aside £4.7 billion to compensate the public sector in England to cover increases, with Scotland likely to see a population share of the funding through the Barnett formula.
But Scotland has consistently had a relatively bigger public sector workforce than the rest of the UK, meaning a population share of the total pot will not cover the increases, forcing public services or the Scottish Government to foot the bill.
Speaking as the hike comes into effect, Shona Robison said: “The UK Government’s national insurance hike is bad for our public services and bad for business.
“The UK Government is short-changing the Scottish Government’s funding for vital services like the NHS and putting business at a disadvantage with this tax on jobs.
“Given that UK Government ministers claim their number one priority is driving economic growth, it is inexplicable that they would take a decision that will impact employers in this way.
“The Chancellor is also yet to confirm the additional funding we have been promised to mitigate employer national insurance contributions in the public sector, despite the new financial year starting and the policy coming into effect.
“It is estimated that there will be a £400 million public sector funding shortfall and this will have wide-reaching consequences on the services people across Scotland rely on.”
While the Chancellor has not explicitly confirmed the funding for Scotland, the Treasury has repeatedly made clear it will be allocated using the Barnett formula.
The Finance Secretary added: “Coupled with a spring statement which balanced the books on the backs of disabled people, the decision-making of the UK Government is bringing back the worst mistakes of austerity and they must take responsibility for the pain that will be caused by their actions.”
With public spending projected to go up in total in the coming years, the UK Government has repeatedly rejected accusations of a return to austerity.
Scottish Tory finance spokesman Craig Hoy said the increase will have a “devastating impact” on Scotland’s economy.
“The NI hike is not just another broken promise from Keir Starmer, it highlights Labour’s reckless instinct to tax, spend and borrow remains intact,” he said.
The Tory MSP added: “It will hold down wages, prevent the creation of new jobs and stymie growth. That’s the last thing businesses need on top of the SNP’s failure to pass on rates relief.
“It’s a double whammy for Scottish workers, too, as they already pay the highest income tax in the UK and face eye-watering council tax rises under the SNP.”
