The £350m cost hike for Scottish councils and how it is linked to National Insurance rise

Cosla, the local authority body, estimated the direct cost of an increase in employer National Insurance contributions will be £265 million, with an extra £85 million associated with adult social care.

“This additional cost is occurring at a time of unprecedented financial pressures for local government,” it said in a briefing sent to MSPs.

The UK government said funding for councils is devolved to Scottish ministers. But First Minister John Swinney called on the Treasury to provide more clarity on how public services will be compensated for the hike.

Chancellor Rachel Reeves announced an increase in the threshold paid by employers in her first Budget last month, estimated to raise more than £25 billion.

The Scottish Government has stressed that public services should be shielded from the increase, which it says will cost the public purse £500 million.

The UK Government says the Scottish Government will receive an extra £3.4 billion next year as a result of the Chancellor’s decisions as well as £1.5 billion in the current financial year, alongside “additional funding” to support with National Insurance costs.

Speaking to journalists during a visit to Wardie Primary School in Edinburgh on Wednesday, Mr Swinney said discussions with the Treasury on reimbursement for public services are ongoing.

The First Minister said: “We still do not have certainty, and I don’t expect us to have certainty on this question when we set a Budget on December 4.

“Now this is not some trivial, inconsequential factor. This is half a billion pounds. It’s a huge amount of money about which we have financial uncertainty as we go into the Budget.”

He said he is particularly concerned about the impact on the care sector. Cosla said other affected services will include early learning and childcare, children’s social care and registered social landlords.

The SNP health secretary said the National Insurance hike could cost the NHS as much as £200 million. Speaking during a debate in Holyrood on Wednesday, Neil Gray accused Ms Reeves of “balancing the Budget on the backs of charities”.

He said: “So it all boils down to, once again, Scottish Labour asking Scottish public services to pay for a bad UK decision. What a shameful position they have got themselves into where they will sell out our Scottish public services to fill the UK Treasury coffers. This government will not stand for it.”

Scottish Labour deputy leader Dame Jackie Baillie accused the Scottish Government of blaming others for the state of the health service and the nation’s finances.

She told MSPs: “What is genuinely puzzling is that the Scottish Government is still supposedly in discussion with the UK government and I have not heard that negotiations have ended. Perhaps more negotiations and less posturing would serve the people of Scotland much better.”

A UK government spokesman said: “With public services crumbling across the UK including Scotland, and an inherited £22 billion fiscal black hole from the previous government, we had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability.

“Funding for local government is devolved to the Scottish Government and it will receive additional funding on top of its record £47.7 billion settlement to support with costs associated with changes to employer National Insurance.”