Treasury must fully fund public sector tax increase, insists Robison

It is “vital” the UK Government fully funds the cost of a tax increase on the public sector in Scotland, Finance Secretary Shona Robison said as she called for clarity.

Chancellor Rachel Reeves announced a hike in employers’ national insurance contributions in her Budget last week, and pledged to cover the increases in the public sector in England.

The Scottish Government has said the cost to the taxpayer if the increase is not funded north of the border would be around £500 million, which is separate to the £3.4 billion funding due to Holyrood ministers next year.

But Ms Robison has urged the Chancellor to provide clarity on how much funding will be provided to Scotland to cover the cost of the tax increase.

“We have broadly welcomed the UK Government’s autumn Budget as a step in the right direction, however one glaring issue is the pressure that the increase of employer national insurance contributions have on funding for Scotland’s public services,” she said.

“We will be publishing our Budget for 2025-26 in just 31 days, and without a guarantee the national insurance costs will be fully met by the UK Government, we face a financial hole of up to £500 million that could see funding diverted from frontline services.

“Scotland has a proportionately larger public sector than England, and higher levels of public sector pay.

“It is vital the Treasury fully funds the actual costs in Scotland’s public sector, and doesn’t just give a much lower value Barnett share of spending in England.”

Speaking during First Minister’s Questions on Thursday, John Swinney also raised the issue in response to Scottish Labour leader Anas Sarwar, describing it as “a £500 million question”.

The UK Government has been contacted for comment.