National insurance hike ‘lacks clarity’, says Kate Forbes

Scotland’s finance secretary has hit out at the “lack of clarity” over the national insurance hike in the UK.

This week, MPs voted to back an increase to national insurance contributions of 1.25 percentage points to help fund social care reforms.

The devolved administrations were also promised a share of the levy, which would see Scotland receive £1.1bn.

But Kate Forbes, in a letter to chief secretary to the Treasury, Steve Barclay, derided the lack of engagement with devolved administrations.

“The levy has significant implications for employees and employers in Scotland, funding for devolved public services and the operation of the public finances at UK and devolved level,” she said.

“The lack of any prior engagement with the Scottish Government or, I understand, the other devolved administrations, is regrettable.

“This has been compounded by the disorderly manner in which the announcement has been communicated and explained.

“In particular, there have been mixed messages about the interaction between the general administration of NIC revenues, the hypothecation of a proportion of NIC revenues to provide funding for health and social care, and the relationship with the Barnett formula.

“There have also been unhelpful assertions about the impact of the announcement on the competence that Scottish ministers and the Scottish Parliament rightly hold over decisions relating to funding for devolved public services.

“This has resulted in a complete, but entirely avoidable, lack of clarity about the actual impact of the announcement on devolved budgets.”

Forbes went on to ask five questions of Barclay about the levy.

She inquired how much in Barnett consequentials would come to the Scottish Government as a result of the levy and if the money would be ring-fenced.

Although, the Scottish Government has previously said all consequentials in health and social care will be spent on the sector north of the border.

She also asked for a breakdown of the amount for both health and social care as well as an assurance that the funding will not create a shortfall in Barnett funding in next year’s budget.

Forbes also asked for “urgent confirmation” of Scotland’s “consequential position” ahead of the October spending review and for an assurance that any funding from the levy will not be undermined by negative consequentials.

The finance secretary added: “While I have focused in this letter on my strong concerns about the handling of this week’s announcement, I do think that, moving forward, there is scope for constructive and mutually beneficial engagement between now and the budget, and beyond.”