Extra £144m allocated to Scots councils amid national insurance hike

The Scottish Government has said it will allocate an extra £144m to support councils with the national insurance hikes.

Finance secretary Shona Robinson confirmed the additional funds would be allocated to support the cost of the changes “inflicted on the public sector by the UK Government”.

It comes after chancellor Rachel Reeves announced the decision to increase employers’ National Insurance contributions in her October Budget.

The chancellor announced funding to protect the public sector in England from the increase, with a population share of the cash likely to be between £290m and £350m.

Ms Robison insisted it was “unacceptable” that Westminster was not raising sufficient cash to cover the cost of the rise, which she said could be more than £700m.

As MSPs debated the Scottish Budget for 2025-26, the finance secretary said ministers at Holyrood are “aiming to provide” funding to meet 60% of the increased charge.

As a result of this, Ms Robison said that councils will receive an additional £144m.

She said: “By providing councils with the equivalent of a 5% national increase in council tax, the certainty I offer today should reduce the pressure on council tax decisions locally and help councils avoid inflation-busting increases.”

Robinson added she would follow up with more information on the issue after receiving further clarity from the treasury.

However, she said it was “essential that the UK Treasury fully fund the actual costs for Scotland’s public sector”.

Adding that the Labour Government at Westminster is only offering a “much lower” sum, she said: “This is unacceptable, and Scottish ministers are pressing the UK Government to fund these additional public sector costs in full.

“Scotland and our public services should not be punished because we have chosen to invest more in public services and the pay of those delivering our public services.”

Her comments came as she said next year’s tax and spending plans would provide “record” funding for the NHS in Scotland, as well as restoring a universal winter heating payment to pensioners north of the border.

In addition, work will be carried out to allow the Scottish Government to effectively scrap the two-child cap on some benefits in 2026.

Deals with the Liberal Democrats and Scottish Green MSPs – as well as Labour’s decision to abstain on the Budget – mean the proposals will pass despite the SNP not having a majority at Holyrood.

And Ms Robison said that this “collaborative approach” highlighted how the Scottish Parliament was “designed to work”, with parties “negotiating to agree solutions for the benefit of Scotland.”

However, the Tories made it clear that they would not support the “rotten Budget” from the SNP Government.

Scottish Conservative finance spokesperson Craig Hoy said: “This is the wrong budget for Scotland, it fails to tackle waste or deliver reform, it fails to reverse damaging trends on welfare and it fails to deliver growth.”

The Tory added that spending on welfare was now “the greatest risk to Scotland’s public finances”, as he told MSPs: “On current trends, the Scottish Budget will crumple under the weight of the welfare bill, and this is a political choice that ministers have taken.”

Meanwhile, a UK Government spokesperson said: “The Budget delivered more money than ever before for Scottish public services, and the Scottish Government receives over 20% more funding per person than equivalent UK Government spending.

“It is for the Scottish Government to allocate this across its own public sector and meet the priorities of people in Scotland.

“It will also receive additional Barnett funding on top of this record £47.7 billion settlement as part of support provided in relation to changes to employer national insurance.”

Scottish Labour finance spokesman Michael Marra said his party “will not stand in the way” of the Budget, but he added: “We desperately want to see Labour’s record investment improve delivery on the front line.

“But we will not vote for this Budget because we very much doubt that it will.

“Years and years of evidence tells us that that is the case, the complete lack of delivery.”

Labour’s key Budget call was a “change in direction” in Government, he said.

Intervening during Mr Marra’s speech, First Minister John Swinney said the “invitation is there for the Labour Party to be part of that big consensus, to do the right thing for Scotland”.

Mr Marra said there was “no evidence” the First Minister could build consensus.

Scottish Green finance spokesman Ross Greer hit out at Labour’s decision to effectively wave through the Budget by abstaining.

“I should start by congratulating Michael Marra, who I do sincerely have a lot of respect for.

“That was a truly barnstorming defence of having had the opportunity to achieve something for the people of Scotland, but turned it down,” he said.

The Green MSP went on to say his party passed up the chance to “give the SNP a bloody nose” in favour of striking a deal.

“I can list a long list of achievements for people and planet as a result of the Greens engagement in this Budget, compared to a Labour Party that got everything it asked for out of this Budget, because it simply asked for nothing,” he said.

Scottish Lib Dem leader Alex Cole-Hamilton said his party will “always act responsibly and try to find common ground where it exists”.

But he added that support for the Budget does not equal support for the Government, which he says has “failed” Scotland.