Scots facing ‘hidden tax bombshell’

George Osborne. Picture: Getty
George Osborne. Picture: Getty
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SCOTS are facing a hidden tax bombshell of half a billion pounds after the next election because of national insurance measures Conservative Chancellor George Osborne brought into his Budget last month.

With the government claiming severe cuts are needed to help balance the nation’s books, Mr Osborne plans to end a special rebate on national insurance (NI) contributions for salary- related pension schemes.

The move is one of several introduced to bring down the deficit, with the Chancellor forced to put his debt target date back to 2017-18, a two-year delay on plans he laid down in 2010.

The change is, according to Treasury figures, likely to net the Exchequer about £5 billion across the whole of the UK in 2016-17, but will be most felt in the public sector, where final-salary pension schemes are more in use.

This means that Scotland, which has a higher proportion of public-sector employment than the UK average, will be hit disproportionately hard, according to Labour Airdrie and Shotts MP Pamela Nash.

While Scotland will be hit by just over 10 per cent of the changes on NI contributions its population is 8.4 per cent of the UK total.

The Treasury’s figures for 2016-17 suggest a net taking of £3.3bn from public-sector employers, £1.4bn from public-sector employees, £600 million from private-sector employers and £200m from private--sector employees.

On the basis that Scotland has 10 per cent of the UK’s public-sector employees and 8 per cent of private-sector employees, it means that there will be a net taking north of the Border of £340m from public-sector employers, £140m from public-sector employees, £50m from private-sector employers and £20m private-sector employees, totalling about £550m.

Ms Nash has demanded a meeting with Lib Dem Scottish Secretary Michael Moore, MP for Berwickshire, Roxburgh and Selkirk, to discuss why a measure which “disproportionately affects Scotland” is being introduced.

She said: “This is just another Tory stealth tax for Scotland.

“The Tory-led government’s failed economic policy is what has led to this and the burden being brought to bear on the public sector in Scotland could lead to increases in their costs; which could lead to even more job losses or cuts to frontline services.”

A Treasury spokesman said that the changes were part of reforms to bring in a fairer single-tier pension which would make most better off.

He said: “We are having to make tough choices to tackle the deficit, but many of the key changes that will come into force in the next few days will benefit working families.”