The SNP claims Falkirk Council stands to lose at least £8 million as a result of the UK Government’s changes to National Insurance contributions, which they believe are “ill thought out”.
It follows the UK Budget on October 30, when the Chancellor of Exchequer raised the rate of the employer national insurance contributions from 13.8 per cent to 15 per cent – starting on April 25.
At the same time the threshold at which employers start to pay National Insurance Contribution was lowered from £9100 to £5000.
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The increases will raise over £25 billion and the UK Government has pledged an additional £3.4 billion to Scotland to support the additional costs through the Barnett formula.
But the leader of Falkirk Council, Cllr Cecil Meiklejohn says the funding does not take into account the full impact of the rise.
She is urging the UK Government to fully reimburse the cost of increasing National Insurance contributions councils now face.
Her motion to Falkirk Council urges other local members to call on the UK Chancellor and the Labour UK Government to “fully reimburse over £500 million costs of Employer National Insurance contributions to the public and third sectors in Scotland which will be incurred as a result of their decision to raise these within the UK Autumn Statement”.
Cllr Meiklejohn said: “The UK Government has pledged to provide additional funding to cover the impact of this on public services.
“However, there has been no allowance for the fact that Scotland has a larger public sector workforce which is better paid than the rest of the UK, nor the knock on effect to the wider supply of goods and services that could have a significant impact to the wider economy.
“The mitigations that are currently anticipated to come to Scotland under the Barnett Consequentials is £300 million – however, the estimated cost to the public sector in Scotland could be as high as £580 million.
“This includes direct costs of £265 million to local government, plus an additional £84 million for adult social care.
“There has been no recognition of the indirect costs to councils of commissioned services such as health and social care, early years education or housing support, the costs of which are anticipated to increase.
“There is real anxiety with the care sector at the risk smaller providers will not be able to survive the increased employer cost and at a time when health and social care is under such significant pressure.
“It goes to show how ill thought out this policy is.
“The impact of the costs to Falkirk Council is anticipated to be in the region of £8m, not including Health and Social Care nor commissioned or procured goods and services.
“Without full mitigation this will place further pressure on Falkirk’s already challenging financial position and our ability to continue to provide services to our most vulnerable citizens.”
She added: “As Council Leader, I wrote to the UK Chancellor on November 12, raising concerns and asking for the reconsideration of the National Insurance Contributions on the Public Sector, but local government, charities and the third sector in particular.
“As yet, I have not received a response.”
The motion going to council says that any mitigation “must include full funding for Falkirk Council and every Scottish local authority”.
It adds: “If the Chancellor does not fully reimburse these costs, it will have a detrimental impact on the services the people of Scotland rely on and risks the livelihoods of staff across sectors, including a cost here in Falkirk of up to £8 million.”
The Labour group on Falkirk Council say they won’t oppose the motion but they do intend to ask for an addendum that would focus on ensuring that the Scottish Government’s pass on any funding to cover the costs of the rise.
If accepted, their addendum would instruct the Chief Executive to write to the First Minister asking for an assurance that “on this occasion the additional Barnett consequentials allocated to the Scottish Government by the UK Government of £1.5 billion for 2024/2025 and £3.4 billion for 2025/2026 will be allocated to local councils and to Health and Social Care Partnerships in proportion to the increases in these areas by the UK Government.”
The motion will be debated by Falkirk Council at its meeting on Thursday, December 12, at 10 am in Grangemouth Community Education Centre, Abbots Road, Grangemouth.
The meeting will also be livestreamed on the council’s YouTube channel.
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