THE consequences to the public sector in Scotland of the increase to National Insurance could be “catastrophic”, the country’s Health Secretary has said.
The UK Government announced plans to increase employer contributions in its first Budget in October, sparking concerns in the public sector about potentially increased costs.
The Scottish Government in particular has taken issue with the change, given the bigger per capita public sector north of the Border, and the offer of between £290 and £350 million despite claims the cost could be as much as £750m.
Appearing before the Health, Social Care and Sport Committee at Holyrood, Health Secretary Neil Gray described the National Insurance rise as the “greatest risk” to the public sector in the coming year, adding: “We do not have clarity or certainty yet as to what that looks like.
He warned “the entirety of the public sector and those who are contracted to deliver public services such as GPs, social care providers, dentists, those within the community and voluntary sectors” could be affected.
He added that there was an “immediate substantial deficit, possibly of £400m”.
“We know from social care providers that for some this is an existential risk… for some GPs I’ve been speaking to it’s an existential risk,” he said.
He went on: “That would be evidenced by the fact that we still don’t have clarity in terms of the, as they would describe it, mitigations to the damage that this will cause.
“I think there are other ways that they could have achieved raising revenue that is required to start to unpick austerity.
“This was the wrong choice and is going to have potentially catastrophic implications for not just health and social care services, but public services, not just in Scotland but across the UK.”
He called on members of the committee to back him and the Government’s calls for the issue to be dealt with “at source” by the UK Government.
The SNP and Plaid Cymru are uniting with Green MPs to submit a cross-party amendment calling for the reversal of the tax hike.
The UK Government has offered £300m to Scotland to cover the cost of its own tax hike, however, Scottish Finance Secretary Shona Robison has warned the figure is "simply not good enough" and will not cover the planned rise in employer NICs.
