UK Government must ‘fully reimburse’ NI rise on public sector, says Neil Gray

Scottish ministers are urging the UK Government to “fully reimburse” the cost of its national insurance increase to the public sector in Scotland, as MSPs debate the matter on Wednesday.

Health secretary Neil Gray, who will lead the debate, said the rise in NI contributions to be paid by employers could cost the public sector in excess of £500m.

The most recent statistics found almost 600,000 people were employed in the public sector in Scotland, around 22 per cent of all employment.

The proportion is significantly higher than the UK average, were 17 per cent of the workforce is employed in the public sector.

The health service is the largest employer in Scotland.

Speaking in advance of the debate, Gray said: “Our public services should not pay the price for Labour’s UK budget – and I am asking MSPs across parties to unite and make that clear today.

“Scotland’s funding should be used for the benefit of the people of Scotland and the crucial public services we all rely on – it should not under any circumstances pay for the UK Government’s National Insurance increase.

“Parliament should be able to speak with one voice and demand that the UK Government fully covers the costs of their own tax hike. The people of Scotland would expect nothing less.”

The motion before parliament also notes the possible impact of the NI hike on the education, hospice and charitable sectors.

Earlier this week, Edinburgh University issued redundancy warnings, in part blaming the NI increase.

The Scottish Council for Voluntary Organisations has estimated the change will cost the voluntary sector £75m per year would could put jobs and services at risk.

The Conservative amendment to the motion warns of the “detrimental impact on all sectors of Scotland’s economy”.

The party is also calling on the Scottish Government to “start the process of reversing the increased tax burden” in its own upcoming budget, having launched their proposals on tax on Tuesday.

It is asking the government to scrap the basic and intermediate income tax rates, with the 19 per cent starter rate to apply to all earnings up to £43,662. It is also calling for business rates relief for retail, hospitality and leisure firms, and for LBTT to be reduced to zero on residential properties up to £250,000.

Labour MSPs will argue the NI increase is necessary to “fix the foundations of the economy” and their amendment highlights a commitment to provide additional funding to the public sector in light of the change.