Scotland to receive £300m to cover UK National Insurance hike

The Scottish Government will receive an extra £300m to cover the cost of the rise in the cost of National Insurance in the public sector.

A UK Government source told STV News the Scottish Government would receive between £295m and £330m via the Barnett Formula to cover the increase.

It comes after Chancellor Rachel Reeves announced an increase in the threshold paid by employers in her first Budget, with a view to raising more than £25bn.

Reeves said Scotland would receive an extra £3.4bn next year as a result of the decisions as well as £1.5 billion in the current financial year.

However, the Scottish Government stressed that the increase would cost the public purse £500m and called for public services to be shielded from the change.

John Swinney said he was particularly concerned about the impact of NIC rises on the care sector.

More than 70 businesses including Tesco, Asda and Sainsbury’s voiced their concerns in an open letter to the chancellor, saying the changes mean price hikes are a “certainty”.

Their views were echoed by another joint letter organised by UK Hospitality earlier this month and published in the Sunday Times, with some bosses revealing minimum wage jobs could become “unviable” as a result of the new national insurance contributions threshold.

Prime Minister Keir Starmer defended the decisions, stating: “Make no mistake, I will defend our decisions in the Budget all day long

“I will defend facing up to the harsh light of fiscal reality.

“I will defend the tough decisions that would be necessary to stabilise our economy and I will defend protecting the pay slips of working people, fixing the foundations of our economy and investing in the future of Britain and the future of Wales, finally turning the page on austerity once and for all.”