SNP claims minimum wage earners in Scotland will be hit by pay cut after tax rises

Rising National Insurance contributions will see those on the minimum wage hit by a £72-a-year cut just months after a wage rise, the SNP has said.

The SNP said the sum may be considered “loose change” by the Chancellor, but that it may make the difference between “heating and eating”.

The figures used by the SNP show that once national insurance contributions rise, people working full time on the national minimum wage – set to rise to £9.50 an hour – will earn £72 per year less than had the tax stayed at the same rate.

However, with the rise in minimum wage, individuals are likely to earn almost £20 per week more even with the tax rise when compared to the situation prior to the minimum wage rise.

The SNP has criticised the UK Government's budget.

Spending power is also likely to be impacted by rocketing energy bills and wider inflation, with research from the New Economics Foundation showing the poorest fifth of households would still be £380 a year worse off despite changes to Universal Credit, compared with keeping the £20 uplift cut earlier this month.

SNP MSP and the convenor of Holyrood’s finance committee, Kenneth Gibson, said the budget did “very little for the majority” and claimed the Conservatives could not fight for those on the lowest incomes.

He said: “Behind the smoke and mirrors of the Chancellor’s budget, the recovery from the pandemic will be built on the backs of those on the lowest incomes. He is giving with one hand and taking with the other.

“[A total of] £72 might be loose change to the millionaire Chancellor, but for some people it can make the difference between heating and eating.

“Increasing National Insurance is a tax on the poorest meaning that even with increases to the minimum wage, thousands of hard-working families will lose out.

“The budget did very little for the majority, with slim pickings for those on the lowest incomes.”

Boris Johnson has meanwhile insisted in the wake of the Budget that inflation is likely to subside once short-term supply chain problems have come to an end.

Inflation is forecast to average 4 per cent over the course of next year, wiping out the effect of higher wages and leaving the average household no better off than they are now.

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