The Scottish Government has warned the move linked to the National Insurance hike is “deeply disappointing”.

SNP ministers will receive less than half the funding from Westminster they need to mitigate the impact of the UK government’s controversial employer National Insurance hike.

Chancellor Rachel Reeves announced in her Autumn Budget that employer National Insurance Contributions (NICs) would rise from 13.8 per cent to 15 per cent, coming into force from April 6, 2025.

The policy has been roundly criticised by businesses and the public sector - amid warnings it could see costs soar and put off firms from hiring more staff.

The Scottish Government had been given previous assurances that Labour ministers would cover the costs of the rise in Scotland's public sector, but had yet to have it confirmed.

Now, the UK government has confirmed Holyrood will receive just £339 million, despite an estimated bill of more than £700m for public services in Scotland.

SNP Finance Secretary Shona Robison has repeated her calls for the tax increase to be fully funded.

She said: “We have been calling for the UK government to abandon its employer National Insurance rise, which risks damaging the economy by making it harder for businesses to take on or keep staff.

“Failing that, we have asked that they fully fund this tax increase to ensure Scotland’s NHS, councils and other public services don’t lose out on vital revenue.”

She added: “As such, it is deeply disappointing that the funding confirmed today falls so far short of the more than £700m bill we estimate public services face – less than half of the cost of the National Insurance hike.

“This settlement fails to take account of the fact that we have a larger public sector per person than other parts of the UK. It feels like Scotland is now being punished for having decided to employ more people in the public sector and to invest in key public services.

“I would urge UK ministers to reconsider – and not leave Scotland with a bill worth hundreds of millions of pounds.”

Cosla, the umbrella organisation for local authorities in Scotland, has estimated the UK government policy would cost councils an extra £265m, as well as an additional £85m for adult social care services.

In February, Ms Robison offered an extra £144m to local authorities to mitigate the increase in National Insurance contributions and what she said would be a move to “avoid inflation-busting increases” to council tax. But council tax has risen by the highest amount in a generation in local authorities across Scotland.

After Ms Robison delivered her draft Budget in December, the Scottish Fiscal Commission warned SNP ministers about the potential impact of the National Insurance increases not being fully funded by the UK government.

The commission warned the larger share of spending on public sector wages north of the Border meant that it was unlikely the full costs of covering employer National Insurance increases was expected to be funded - warning it would add to pressure on staff costs within individual parts of the public sector.

The organisation warned the Scottish Government to be prepared to manage the risks that its wage bill is likely to be higher than budgeted for.

The UK government has been contacted for comment.

SNP ministers to receive under half the funds to cover National Insurance hike in 'deeply disappointing' hit

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