LABOUR have failed "a question of basic competence" by bringing in a hike to employers' National Insurance contributions (NICs), Deputy First Minister Kate Forbes has said.
Forbes has warned the move risks harming economic growth, highlighting estimates that Scotland faces more than £2 billion in higher taxes next year as a result of the autumn Budget, driven largely by increased NICs.
The cost of the national insurance decision for Scotland’s directly-employed public sector is reported to be well over £500 million, and when costs include the likes of childcare settings, colleges, and adult social care, it is around £750m.
The Scottish Council for Voluntary Organisations estimates that the third sector face costs of over £75m in employer NICs.
Speaking ahead of her keynote speech to the Investment Association Conference in Edinburgh, Forbes said: “Labour’s National Insurance hike has all the hallmarks of a plan that just was not thought through.
"Just like the Winter Fuel Payment debacle, it is clear that the Treasury took a decision and then considered the consequences afterwards.
“The desperate scrambling for a solution after the fact and the sheer panic which has emanated from the Treasury in the days and weeks since the Budget is proof of that.
“Then just yesterday, we saw the UK Government brief the press that they would be refusing to cover even close to the full costs, leaving hundreds of millions of pounds which they clearly expect to be absorbed by cuts to public services in Scotland. “This is a question of basic competence – and the UK Government have failed at the first hurdle."
She said more than £500m would be needed to cover the staff costs of those directly employed by in the public sector, rising to £750m when indirect employees such as those in childcare are included. Forbes added: “Businesses across the country are planning their year ahead, and making decisions about whether they can afford to take on extra staff – or in some cases, whether they can continue to keep the staff they do have. Labour’s tax on jobs is the last thing they needed.
“The UK Government’s decision could seriously harm economic growth here in Scotland – forcing businesses to rethink their plans to expand, denying opportunities to workers, and in some cases forcing small businesses to close altogether.
“The national insurance hike could prove to be disastrous for the economy, public services, businesses and families – and it is vital that the UK Government reconsiders their approach.”
