The Scottish Government immediately called for £500m to cover the increase to the Scottish public sector.
Earlier this month the Herald revealed that Scotland councils and universities were facing additional costs of £265m and £45m respectively due to the national insurance hike.
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The principal of Edinburgh University Peter Mathieson last week noted “a multi-million pound increase to our salary bill” as he warned of jobs cuts in an email to staff.
Following the UK budget it was understood there would be talks between the two governments, but on Monday the Treasury said Scotland would be given a population share of the cash used in England to mitigate the cost to the public sector. It is understood this figure ranges from £295m to £330m.
But responding to the Treasury, the Scottish finance secretary said the funding offered “simply won’t cover the cost of this hike” and there could be “irreparable damage” caused to services in Scotland if the funding is not fully reimbursed.
She suggested more than £500m 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.
“That Labour are trumpeting that they could reimburse less than half of this sum and expect people in Scotland to celebrate is beyond belief – and shows a complete disregard for public services in Scotland,” she said.
“Clearly, the Labour Government expect the shortfall of hundreds of millions to be absorbed by cuts to Scotland’s public services. Let me be clear, that is nothing less than Westminster austerity through the back door.”
She added: “Labour need to fully fund their decision to avoid irreparable damage to our public services in Scotland.
“With just over a week until the Scottish Government announces its budget for the coming financial year, we need urgent and formal clarity from the UK Government that they will do so.”
In her budget, Ms Reeves announced an increase to employers’ national insurance contributions while also lowering the threshold at which they start paying contributions.
The rate will rise by 1.2 percentage points to 15% from April next year and will now be paid on staff earnings from £5,000, rather than the current £9,100 level.
A spokesman for the UK Government said: “The Budget delivered more money than ever before for Scottish public services and the Scottish Government receives over 20% more funding per person than equivalent UK Government spending.“It is for the Scottish Government to allocate this across its own public sector and meet the priorities of people in Scotland.
“It will also receive additional Barnett funding on top of this record £47.7 billion settlement as part of support provided in relation to changes to employer national insurance.”
Ms Reeves’s budget provided an extra £3.4 billion for next year, which the Scottish Government will likely have to use to cover the remainder of the increased costs to the public purse through the national insurance hike.
