STV NewsThe boss of a Scottish care home provider says the increase to employer national insurance contributions is a “shocking betrayal” to the sector.
Chancellor Rachel Reeves announced in her October budget that employer contributions would rise by 1.2% to 15% while the threshold at which it is paid has also been reduced.
UK ministers have set aside £4.7bn to compensate the public sector in England to cover increases, with Scotland likely to see a population share of the funding through the Barnett formula.
But Scotland has consistently had a relatively bigger public sector workforce than the rest of the UK, meaning a population share of the total pot will not cover the increases, forcing public services or the Scottish Government to foot the bill.
There are around 1,500 staff across all 19 of Renaissances Care’s homes in Scotland.
Robert Kilgour, the firm’s chairman, says the changes in employers national insurance contributions are deeply concerning.
He claims the hike means the firm have to find an extra £900,000 a year – and that the consequences could be “devastating”.
He told STV News: “It is a shocking betrayal by this government of the amazing hard work shown by our frontline carers.
STV News“This does impact working people, its a fallacy to say it doesn’t.
“There was a huge lowering of the threshold with the national insurance changes which was the real killer blow.
“A lot of staff from our cost point of view as a business have gone from zero to 15% overnight.
“That has added around £900,000 to our annual costs from today. That’s not a one off, that’s every year going forward from today.
“It is unexpected and unbudgeted.”
The Scottish Finance Secretary says the policy has come at the wrong time and is bad for business and the public sector.
Shona Robison said: “We’re really concerned about the hike, particularly for business at a time where we’re now seeing tariffs which will be an extra burden for Scottish exporters.
“This is really bad timing that we’re seeing the hike in employers national insurance contributions.”
A UK government spokesperson said: “Growth is our number one mission and we have already achieved a great deal – including ripping up needless red tape, establishing GB Energy in Aberdeen, raising the state pension and National Minimum Wage, and capping corporation tax.
“The Scottish Government will receive additional funding on top of a record £47.7bn settlement to support changes to Employer National Insurance.”
Follow STV News on WhatsApp
Scan the QR code on your mobile device for all the latest news from around the country
