THE SNP Government will provide Scottish councils with tens of millions of pounds in a bid to mitigate the cost of tax hikes imposed by Labour at Westminster, the Finance Secretary has said.
Speaking in a debate on the Scottish Government’s proposed 2025/26 Budget, Shona Robison told MSPs that a total pot of £144 million would be allocated to helping councils fund increases to employers’ National Insurance contributions (NICs).
In her UK Budget last October, Chancellor Rachel Reeves said that employers’ NICs would rise from 13.8% to 15% on a worker's earnings above £175. The changes will kick in from April 1, the same day by which the Scottish Government must have passed its Budget legislation.
As the tax rises were levied on employers – in order to allow Labour to claim they had not technically raised taxes on working people – local authorities and public service providers also face cost increases.
Local authority umbrella body Cosla estimated in a briefing to MSPs last year that the NIC increases would cost councils an extra £265m per year in total, not including £85m associated with social care.
The Scottish Government has said it will need around £530m to cover increased staffing costs in the public sector, rising to more than £700m if indirect employees – such as those in social care – are included.
The UK Government has said it will provide somewhere between £295m and £330m to cover the increase in costs, an amount which Robison previously called "unacceptable" and “very low”.
“It is essential that the UK Treasury fully fund the actual costs for Scotland’s public sector, however they have indicated we will instead receive a much lower value Barnett share of spending in England.
“This is unacceptable and Scottish ministers are pressing the UK Government to fund these additional public sector costs in full. Scotland and our public services should not be punished because we have chosen to invest more in public services and the pay of those delivering our public services.
“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.
“I do, however, want to try and provide as much clarity today as I can, particularly for local government.
“I recognise that councils are in the process of finalising their budgets, and although we don’t yet have figures from the Treasury, I want to support local government in managing their planning assumptions.
“I can therefore confirm that as things stand I am aiming to provide funding that covers 60% of the reported costs for all portfolios.
“This means that for local government I will commit to providing them with an additional £144m to support the cost of these hikes inflicted on the public sector by the UK Government.
“By providing councils with the equivalent of a 5 per cent national increase in council tax, the certainty I offer today should reduce the pressure on council tax decisions locally and help councils avoid inflation busting increases.
“I will follow up with further detail on this issue once I receive further clarity from the Treasury, which I continue to press for.”
