Public sector has to absorb tax hike cost, says Deputy First Minister Kate Forbes

Forbes told BBC Scotland News: “We know that there will be a shortfall in covering National Insurance contributions for the public sector.

“At the moment the public sector will have to absorb that.

“In the same way that we can’t invent money to cover this we ultimately have to balance our budget and we balance our budget by ensuring that we cover all costs.

“And there will be an expectation on all parts of the public sector, just as there is in the private sector, to ensure that they cover their tax liabilities.”

The Scottish government estimates the increase in employers’ National Insurance contributions will cost about £550m for public sector workers, rising to £750m when indirect employees such as those in childcare, higher education or social care are included.

Holyrood ministers have been told to expect about £300m in compensation from the Treasury. It has based this figure on the Barnett formula – designed to give devolved nations a proportionate share of spending in England.

Finance Secretary Robison described that total as “unacceptable” and “very low” based on the Scottish government’s projections using the same formula.

The rate of employer National Insurance contributions is increasing in April from 13.8% to 15%. The threshold at which employers have to start paying the contributions are also being lowered from £9,100 to £5,000.

About 600,000 people are employed in Scotland’s public sector, making up 22% of the total workforce – compared to about 17% in the UK as a whole.

Scotland’s public sector is also relatively better paid than the UK workforce.