Scottish Finance Secretary Shona Robison has condemned the UK government’s offer of a £300 million increase in funding, describing it as “simply not good enough” to cover the rising costs of employer National Insurance contributions (NICs) for Scotland’s public sector.
Insufficient Funding for Public Sector Staff Costs
The UK government has proposed an additional funding package between £295 million and £330 million to assist with the increase in NICs, which are set to impact public sector employers across the UK. However, Robison has emphasized that Scotland will need over £500 million to cover the costs associated with direct public sector employees, and up to £750 million when considering the indirect employees working in fields such as childcare, colleges, and social care.
In response, Robison said, “This cannot stand,” and warned that the Scottish government would pursue the UK Treasury “rigorously” to ensure Scotland’s public services are fully funded. She added that the sum offered was “very low” compared to the Scottish government’s estimates.
Disappointment with the Barnett Formula
The £300 million increase was calculated using the Barnett Formula, which is designed to allocate a proportionate share of government spending to Scotland, Wales, and Northern Ireland based on spending levels in England. While this formula provides some financial relief, Robison insists that the funding is insufficient given Scotland’s larger public sector relative to the UK as a whole.
Scotland, Robison pointed out, employs more public sector workers, including teachers, nurses, and police officers, than other parts of the UK on a per capita basis. She argued that Scotland should not be “punished” for having a proportionally larger public sector and called for the UK government to provide more clarity regarding the compensation it will offer to Scotland, especially ahead of the Scottish Budget, set to be announced next Wednesday.
National Insurance Hike and UK Budget Implications
The funding increase comes in the wake of the autumn UK Budget, where Chancellor Rachel Reeves announced a hike in employer National Insurance to help boost public service funding across the UK. Reeves confirmed that Scotland would receive £3.4 billion in additional funding for the fiscal year 2025-26; however, this sum did not account for the costs of National Insurance contributions.
The UK government has insisted that the £300 million should suffice and that the SNP (Scottish National Party) should use this money to address NHS waiting times and improve education outcomes, rather than filling a budget shortfall caused by “years of financial mismanagement.”
The Financial Picture for Scotland
The UK government also plans to send an additional £1.5 billion to Scotland for the financial year 2024-25, in line with the Scottish government’s expectations. However, the £300 million increase for National Insurance costs remains a significant sticking point.
Robison’s comments underscore the ongoing tensions between Holyrood and Westminster over financial settlements, with Scotland seeking more substantial funding to meet the needs of its public services and the UK government pushing for reforms and accountability in spending.
