For immediate release

Clare Haughey, MSP for Rutherglen Constituency, has urged the UK government to reconsider their planned tax hike on Employers’ National Insurance Contributions (eNICs), warning of the damaging impact it will have on many vital local services.

UK Chancellor, Rachel Reeves, revealed in the Budget that the rate of employer contributions will rise from 13.8% to 15%, and contributions will start at a lower threshold. 

In a letter to the UK Chancellor, Ms Haughey expressed her deep concern that there has been no clarity on whether South Lanarkshire Leisure and Culture, GP surgeries, nursery providers, care homes, hospices, and local charities and organisations who deliver crucial services in our communities will receive any support in the face of these increase to their running costs.

Public and third sector organisation across Scotland are concerned that they will not be able to meet increased costs without either job losses, or a reduction or withdrawal of services. 

The Scottish Council for Voluntary Organisations has warned that the National Insurance changes could cost the voluntary sector a massive £75 million.  The British Medical Association have sounded the alarm that some GP surgeries would have to close if they are not exempted from the national insurance rise, and the Early Years Alliance have warned it will have a negative impact on the childcare sector. 

The local government umbrella group, COSLA, have warned that without extra support, the tax rise will have a detrimental impact on both Councils and partner organisations who deliver vital services across communities. 

On Monday, the UK Treasury announced Scotland would be given a population share of the cash used in England to mitigate the cost to the public sector – understood to be around £295 million to £330 million.

However, the Scottish Government have estimated that more than £500 million would be needed just for those directly employed by the public sector, rising to £750 million when indirect employees such as those in childcare, colleges or social care are factored in.

Commenting, Clare Haughey said:

“The UK government’s hike to employer national insurance contributions is extremely concerning – I am deeply worried about the negative impact this will have on the operations of GPs, pharmacies, nurseries, charities, care providers and hospices.

“The Labour Government, must urgently reconsider and exclude these organisations from this tax rise.  They support so many people across Rutherglen and Cambuslang –  we should be supporting them as much as possible, not increasing their tax burden.

“What Labour have announced for the public sector and their partners is a shortfall of hundreds of millions of pounds – which presumably they are expecting to be absorbed by cuts to Scotland’s public services.

“They need to fully fund their decision to hike taxes, to avoid irreparable damage to our public services.”

ENDS