SNP ministers urge Treasury to address 'growing alarm' over tax hike

SNP ministers have called on the UK Treasury to urgently clear up the “growing confusion and alarm” caused by a planned tax hike.

Scottish finance secretary Shona Robison said the increase to employer national insurance contributions could represent a £500 million hit to public services.

She said third sector organisations, GP practices, social care providers and many more public services could be affected, with “devastating” knock-on consequences for vital frontline services.

Shona Robison | PA

Ms Robison said the Treasury had so far failed to provide any clarity over how the cost will be mitigated.

The UK Government previously said extra funds would be provided on top of an additional £3.4 billion heading to Scotland as a result of the Budget.

Ms Robison said: “The UK Government’s employer national insurance hike could hamper services in Scotland to the tune of around £500m – and the more we look at this announcement, the more concerned we are by it.

“With the Treasury failing to provide clarity about any mitigation process at the time of the Budget’s publication, services across Scotland are feeling growing confusion and alarm at the very time where they need to be able to plan ahead.

“Third sector organisations, GP practices, social care providers and many more public services could be affected, and this will inevitably have knock-on consequences for the delivery of vital frontline services.

“These services are already under financial pressure following years of rising costs and pressures due to the UK’s mismanagement of the economy – and the last thing they need is to be hit by this Labour jobs tax.

“The Treasury must fully mitigate the impact of this change on the public sector in Scotland - we need clarity on this as soon as possible as we prepare to publish our own budget on December 4.

“The Chancellor’s budget failed to restore the winter fuel payment and failed to remove the two-child cap on benefits – and we now see a potentially devastating effect on frontline services in Scotland.”

Last week, BMA Scotland, the doctors' union, said the hike was potentially a “substantial blow” to Scotland’s GPs.

Dr Iain Morrison said: “These additional costs could threaten the viability of practices and lead to cutbacks in services – which ultimately means that it is patients who will suffer.”

Meanwhile, the Scottish Council for Voluntary Organisations said it could have a significant financial impact on many voluntary sector employers, with an estimated cumulative cost of £75 million to the sector in Scotland.

Chief executive Anna Fowlie said: “While smaller organisations will be protected by the welcome increase in employment allowance, many voluntary sector employers will be significantly impacted by these changes.

“Employing more than 133,000 people across Scotland - 5 per cent of Scotland’s workforce - the voluntary sector is a significant employer. Yet this budget fails to recognise the implications of these changes on the sector.

“Our sector - already strained by rising costs, increased demand, and a bleak funding landscape - cannot afford additional financial pressures.”

A UK Government spokeswoman said: “The Scottish Government will receive additional funding on top of the £3.4 billion of Barnett consequentials announced at Budget to support them with the costs associated with changes to employer national insurance contributions. More details will be set out in due course.”