1 week Ago
As I predicted in a previous column, the increase in employer National Insurance (NI) contributions has not gone down well. That’s because local authorities, health boards, charities, care homes, hospices and other public services agencies will have to account for this additional spend within their budgets. That means less money for frontline services.
To give a local example, Ardgowan Hospice have said that this policy will cost them £58,942 per year. That’s money which will go into the UK Government’s pocket rather than going directly into local hospice services. Similarly, Marie Curie, the UK’s leading end-of-life charity, have warned that the increase to employer NI contributions will cost them an additional £2.
92m a year. Without further support, they have said that the only option left will be reducing services. Overall, the Scottish Council for Voluntary Organisations has estimated this policy could cost the charitable sector £75m.
Charities play a vital role in our society supporting people in our communities, championing causes and creating positive change in our society – it is not right that they may have to scale back their operations due to the decisions of the UK Labour government. The Chancellor must therefore provide clarity as to whether charities will be liable for increased employer NI contributions. I believe that exempting them could prove more value for money as any reduction in third sector services could end up costing governments more money further down the line due to the impact this could have upon communities.
As I have pointed out though, it's not just charities who’re affected – 659 Scottish care homes are currently run by private organisations, supporting 25,853 older people across the country, and are now facing increased NI contributions. The Coalition of Care and Support Providers in Scotland said the impact could be “catastrophic” on their members. That’s why the First Minister has called on the UK Government to reimburse care providers for their NI contribution increase – and at a time when local government is seeking additional funding, Scottish local authorities are also facing a £265m bill to pay for an increase in employer NI contributions.
In total, approximately 600,000 people are employed in Scotland’s public sector, making up 22 per cent of the total workforce. Finance Secretary Shona Robison MSP has projected that the NI increase for employers could cost the Scottish Government £500m. When you add this all up, it’s easy to see how a significant portion of the additional money being provided to Scotland by the UK Government will be sent right back to London via employers’ NI contributions.
So, despite Labour’s claims of extra funding for frontline services, it’s really a case of giving with one hand and taking with the other..
