SNP MSP for Na h-Eileanan an Iar, Alasdair Allan, has again called for the UK Government to reconsider their position on funding employer national insurance contribution rises for the public sector, as estimates indicate that a significant proportion of the additional revenue gained by Comhairle nan Eilean Siar from the recently agreed council tax rise will be eaten up by this UK Government policy.
In the Autumn Budget, the UK Chancellor announced that employers would need to increase national insurance contributions for their employees from 13.8% to 15%, as well as lowering the threshold at which these contributions would begin to be made. Initially it was expected that the UK Government would fully fund the cost of these increases for public sector organisations, but there was some confusion amongst Labour MPs and Ministers on this issue, and it has since become clear that increased public sector costs will only be partially covered.
Comhairle nan Eilean Siar will be increasing its council tax for island residents by 7.5%, one of the lowest rates agreed across Scotland in recognition of the increased cost of living pressures on islanders in comparison to elsewhere.
The rise is projected to raise an extra £1,012,500 in council tax revenue according to council budget papers. However, the council expects the additional N.I. contributions to cost it £1.5m for 2025-26. The Convention of Scottish Local Authorities (COSLA) are still finalising what proportion of the available additional funding the comhairle will receive to go towards the additional national insurance costs. It is likely that between 59 and 74p out of every extra pound paid by islanders in council tax for the year ahead will go to the UK Treasury to cover these N.I. costs, depending on COSLA’s forthcoming funding allocation decision.
Commenting, Alasdair Allan said:
“Once again, I join with my Scottish Government colleagues in calling on the UK Government to think again, and to fully fund public sector national insurance increases. It isn’t right that public sector organisations across Scotland are being forced to make cuts to free up such significant amounts of money for the UK Treasury at a time when finances are so tight across the board here.
“At the time of the autumn statement, the UK Government was warned about the damaging impact this policy would have on public services if they did not provide adequate funding to support public bodies. Local authorities should be able to spend additional income from council tax rises on local priorities – not find themselves having to send such a huge amount of this additional income back to the Treasury.
“The UK Government has only allocated £300m to the Scottish Government for helping public sector organisations with these national insurance contribution rises, but £550m is actually what is required to cover the cost in Scotland (not including indirect employees such as those in childcare, higher education or social care, which would make the total cost around £750m).
“It seems likely that the majority of extra council tax our island residents are required to pay from April will be going straight to London, when this money could and should be being invested into our local communities, supporting the council services that remain under significant pressure.”
The amount of Scottish Government funding CNES will receive to cover national insurance contributions will be determined by the Convention of Scottish Local Authorities (COSLA) in due course.
https://www.cne-siar.gov.uk/sites/default/files/imce/Budget/2025-26/AA-Budget-and-Council-Tax-Setting-2025-26.pdf
