Unintended consequences of national insurance rise could be catastrophic – Gray
The unintended consequences to the public sector in Scotland of the increase to national insurance could be “catastrophic”, the country’s Health Secretary has said.
The UK Government announced plans to increase employer contributions in its first Budget in October, sparking concerns in the public sector about potentially increased costs.
The Scottish Government in particular has taken issue with the change, given the bigger per capita public sector north of the border, and the offer of between £290 and £350 million despite claims the cost could be as much as £750 million.
Appearing before the Health, Social Care and Sport Committee at Holyrood, Health Secretary Neil Gray described the national insurance rise as the “greatest risk” to the public sector in the coming year, adding: “We do not have clarity or certainty yet as to what that looks like.
He warned “the entirety of the public sector and those who are contracted to deliver public services such as GPs, social care providers, dentists, those within the community and voluntary sectors” could be affected.
He added that there was an “immediate substantial deficit, possibly of £400 million”.
“We know from social care providers that for some this is an existential risk… for some GPs I’ve been speaking to it’s an existential risk,” he said.
This was the wrong choice and is going to have potentially catastrophic implications for not just health and social care services, but public services... across the UK
He added that he not believe the UK Government “understood the implication of seeking to raise that revenue from employer national insurance contributions”.
He went on: “That would be evidenced by the fact that we still don’t have clarity in terms of the, as they would describe it, mitigations to the damage that this will cause.
“I think there are other ways that they could have achieved raising revenue that is required to start to unpick austerity.
“This was the wrong choice and is going to have potentially catastrophic implications for not just health and social care services, but public services, not just in Scotland but across the UK.”
He called on members of the committee to back him and the Government’s calls for the issue to be dealt with “at source” by the UK Government.
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.”
