THE SNP have urged Keir Starmer to give a “cast-iron guarantee” that the National Insurance tax hike reportedly in the upcoming Budget will not hit Scottish public services or affect the Scottish Government’s Budget.
The party commissioned research from the House of Commons Library – published on Wednesday – which found that such a move could cost NHS Scotland and the Scottish Government hundreds of millions of pounds.
The Labour Party pledged in its General Election manifesto that it would not increase income tax or national insurance whilst in government.
Yet recent reports have suggested that the cut will feature in the Autumn Budget, leading the Prime Minister to argue that Labour were keeping their promise to voters, as the pledge referred to workers’ contributions rather than employers.
The SNP have written to Chancellor Rachel Reeves (below) ahead of the Budget on October 30, calling for a full impact assessment of the hike on small and medium-sized businesses and the jobs and pay of workers.
Meanwhile, the SNP’s Westminster leader Stephen Flynn accused Labour of “breaking yet another election pledge”, urging the party to “put the austerity axe down”.
The latest analysis found that increasing employers’ National Insurance contributions by one or two percentage points would cost NHS Scotland, Police Scotland, the Scottish Fire and Rescue Service and the Scottish Government between £70 million and £142m a year.
Across a five-year parliament, it means the tax hike would cost the Scottish Government and Scottish public services in the region of £350m to £710m.
The SNP said that the majority of this sum would hit NHS Scotland, which is Scotland's biggest employer, with around 160,000 staff including doctors, nurses, paramedics, midwives and porters.
Outwith the NHS, Police Scotland with 23,000 officers and staff would face a bill in the region of £8m to £16m a year, while the Scottish Fire and Rescue Service, with 7600 staff, would be hit with a bill of around £1m to £3m a year.
While an exact estimate for Scottish local government is not currently available – due to the complexities involved in determining the cost – the SNP said Scotland's 32 local authorities would face a similar bill of hundreds of millions of pounds across the course of the parliament given they employ a combined 240,000 people.
Similarly, while an exact estimate of the cost of levying National Insurance on employers' pension contributions at 13.8% on Scottish public services is not available – also due to the complexities involved – the SNP estimated it would run into many millions of pounds over the course of the parliament.
‘This isn’t the change that people in Scotland were promised’
Flynn (below) said Scotland has “already suffered 14 years of Westminster austerity cuts” under previous Tory governments.
He added: “Keir Starmer must give a cast-iron guarantee that the Labour Government's National Insurance tax hike won't hit Scottish public services or slash the Scottish Government's Budget.
“By increasing National Insurance taxes, the Labour Party will be breaking yet another election pledge.
“There are serious concerns that doing so could cost the Scottish Government, NHS, schools, police and fire service hundreds of millions of pounds, which would mean, for instance, less money available in Scotland to employ nurses and teachers, or to provide healthcare and education.
“If the Labour Party goes ahead with this tax hike it must, at the bare minimum, ensure that any negative impact on the Scottish Government and Scottish public services is fully mitigated – and that any mitigation comes on top of, not in place of, significant real-terms increases to Scotland's block grant.”
Flynn said that while the Labour Party had pledged to end the cuts, “instead it is increasing them and making things even worse”.
"The Labour Government has already taken the winter fuel payment from around 900,000 Scottish pensioners and pushed thousands of Scottish children into poverty with its two-child benefit cap,” he said.
“Now, it's threatening to cut billions of pounds from public services and raise regressive taxes that will hit the incomes of millions of Scottish workers and small businesses.
“The cost for thousands of small and medium-sized Scottish businesses will be even higher – and there is a very real danger this Labour Party tax hike will result in lower pay for millions of workers, reduced pensions, fewer jobs, less investment and hit the economy.”
Flynn added: “This isn't the change that people in Scotland were promised. I urge the Labour Government to think again, put the austerity axe down and deliver meaningful investment instead.”
