NEARLY 50 Scottish organisations have joined with John Swinney to raise concerns about Labour's “highly damaging” increase to employer National Insurance contributions.
The First Minister has written to Chancellor Rachel Reeves laying out fears about how the hike will affect employers in Scotland and has called for funding to fully cover the additional costs they face.
Public sector and voluntary organisations from across Scotland have given their backing to the letter, which has been written jointly with Cosla president Shona Morrison.
At present, the estimated cost to organisations delivering public services in Scotland to cover the increase in employer National Insurance contributions could amount to £700 million and there are fears it will lead to some organisations struggling to retain staff or offer meaningful pay rises.
The letter has been supported by 48 organisations including the Scottish Fire and Rescue Service, Scottish Trades Union Congress, Scottish Council for Voluntary Organisations and British Dental Association.
Swinney (below) said it is vital the Scottish Government gets clarity on the move ahead of the Scottish Budget being passed.
He said: “I would like to thank all the public and voluntary sector organisations who have come together to call in a unified voice for this decision to be reconsidered.
“The Scottish Budget is expected to pass within weeks, and alongside local authorities, we need clarity.
“We will continue to press the UK Government to raise our deep concern about the implications of the increase to employer National Insurance contributions for organisations across Scotland, and the risk to the vital services they provide if these additional costs are not fully funded.”
The letter has also been supported by the women’s aid charities and rape crisis centres across the country as well as the Scottish Refugee Council, the Scottish Funding Council and Skills Development Scotland.
It comes after Finance Secretary Shona Robison wrote to Chief Secretary to the Treasury Darren Jones about the issue.
The Scottish Budget is expected to pass its final stages in February, but Scotland’s councils will be starting to prepare their budgets and council tax plans based on the draft settlement announced before Christmas and must set them before the end of March.
The letter says: “It is extremely challenging for both the Scottish Government and Scotland’s councils to set balanced budgets which invest in our public services, with continued uncertainty to manage in respect of funding for this increased cost.
“Across the directly employed public sector, the cost of this policy is expected to be around £550 million, with the costs to councils accounting for around £265 million of that.”
It goes on to say there is a “real risk” employers will be unable to award meaningful pay rises, retain staff or even continue to operate with the hike in place.
Swinney and Morrison have both called for the UK Government to take an “actual costs approach” to providing additional funding, outlining that a Barnett share of money would “fall some considerable way short” of what is needed.
“Whether applied to public sector employers, or a broader public services cohort of employers, a Barnett share of the funding which is made available based on the actual costs to UK Departments and local government in England will fall some considerable way short for Scotland given our relatively larger public sector workforce,” the letter says.
“As a result, such an approach would see the Treasury essentially profit from public service employers in Scotland, while the equivalent employers in England are fully reimbursed.
“We ask you therefore to consider carefully the case for taking an actual costs approach to the additional funding to be provided, and to confirm this before the final stages of the Scottish Budget to allow us to plan appropriately.
“The impact for our communities and for the effective management of public finances will otherwise be highly damaging.”
