UK Government to provide £300m to Scotland for NI increase mitigation

Scottish finance secretary Shona Robison has accused the UK Government of “austerity through the back door” after Chancellor Rachel Reeves confirmed the Scottish Government would receive £300m to cover the National Insurance increase.

Treasury officials have told the devolved administration that it will receive between £295m and £330m extra to mitigate the cost of the tax increase on employers.

This is its share of cash being spent in England using the Barnett formula.

But as the Scottish public sector is comparatively larger than England’s, Robison warned this would cause “irreparable damage”.

The Scottish Government has estimated it would need more than £500m to fully mitigate the increase.

Robison, who will deliver the Scottish budget next week, said: “Clearly, the Labour government expect the shortfall of hundreds of millions to be absorbed by cuts to Scotland’s public services. Let me be clear, that is nothing less than Westminster austerity through the back door.

“Labour need to fully fund their decision to avoid irreparable damage to our public services in Scotland.

“With just over a week until the Scottish Government announces its budget for the coming financial year, we need urgent and formal clarity from the UK Government that they will do so.”

The most recent statistics found show 22 per cent of all employment in Scotland is in the public sector.

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

Last week, parliament voted in favour of a government motion calling on the UK Government to “fully reimburse” the Scottish Government for the cost of the tax rise.