The SNP has called for a solid guarantee from Keir Starmer that the National Insurance tax increase expected in the upcoming Budget will not negatively impact Scottish public services or the Scottish Government’s Budget.
The party conducted research through the House of Commons Library, which revealed that such a move could result in significant financial losses for NHS Scotland and the Scottish Government.
Although the Labour Party promised in its General Election manifesto not to raise income tax or national insurance while in power, recent reports indicate that the increase may be included in the Autumn Budget. The Prime Minister argues that this move is in line with the promise made to voters, as it refers to workers’ contributions rather than employers’.
The SNP has written to Chancellor Rachel Reeves ahead of the Budget on October 30, requesting a comprehensive impact assessment of the tax hike on small and medium-sized businesses, as well as on the jobs and wages of workers.
Furthermore, SNP’s Westminster leader Stephen Flynn accused Labour of breaking another election promise and urged the party to stop austerity measures.
According to the latest analysis, increasing employers’ National Insurance contributions by one or two percentage points could cost NHS Scotland, Police Scotland, the Scottish Fire and Rescue Service, and the Scottish Government between £70 million and £142 million annually. Over a five-year period, this tax hike could total £350 million to £710 million for Scottish public services.
The majority of this financial burden is expected to fall on NHS Scotland, which employs around 160,000 individuals, including doctors, nurses, paramedics, midwives, and porters. Police Scotland with 23,000 officers and staff could face a yearly bill of £8 million to £16 million, while the Scottish Fire and Rescue Service, with 7,600 staff, might see costs of around £1 million to £3 million annually.
In addition, Scotland’s 32 local authorities, employing a combined 240,000 people, could face similar costs running into hundreds of millions of pounds over the parliament’s duration. The SNP estimated that levying National Insurance on employers’ pension contributions at 13.8% could also result in substantial costs for Scottish public services.
Flynn emphasized that Scotland has already endured 14 years of austerity cuts under previous Tory governments, and it is essential for Keir Starmer to ensure that the National Insurance tax hike does not harm Scottish public services or reduce the Scottish Government’s budget.
He expressed concerns that the tax increase could lead to reduced funding for essential services like healthcare and education, impacting the employment of nurses and teachers. Flynn urged the Labour Government to reconsider its decision, halt austerity measures, and focus on meaningful investments instead of regressive tax hikes that could harm workers and small businesses in Scotland.