SNP offer £144m to halt 'inflation-busting' council tax rises as Labour under pressure

Finance Secretary Shona Robison has called on Labour ministers to fully fund the more than £700m needed to offset the National Insurance increases being “inflicted” on Scotland’s public sector, warning the funding offered from the Treasury was “unacceptable”.

Amid fears that local authorities could raise council tax by a rate higher than inflation, with some mulling a hike of more than 10 per cent, Ms Robison has stressed her extra funding will help close that gap.

First Minister John Swinney told The Scotsman that proposed council tax hikes of 10 per cent are too high as he urged local authorities to keep rises to a minimum.

READ MORE: John Swinney issues clear message over 'high' proposed 10% Scottish council tax hikes

Speaking in Holyrood on Tuesday during the stage one debate on her draft Budget, Ms Robison told MSPs the increase to National Insurance employer contributions “could add over £530m in costs for directly employed public sector staff”. She said the deficit “increases to £700m” when wider staff in the public sector such as GPs, dentists and social care workers are included.

“It is essential that the UK Treasury fully fund the actual costs for Scotland’s public sector,” she said.

“However, they have indicated that we will instead receive a much lower value Barnett share of spending in England. That is unacceptable and Scottish ministers are pressing the UK government to fund these additional public sector costs in full.”

Ms Robison said “Scotland and our public services should not be punished because we have chosen to invest more in public services and the pay of those delivering our public services”, highlighting that Scotland’s public sector is proportionally bigger than the rest of the UK.

She said: “I recognise that councils are in the process of finalising their budgets. Although we don't yet have figures from the Treasury, I want to support local government in managing their planning assumptions.

“I can therefore confirm that as things stand, I’m aiming to provide funding that will cover 60 per cent of the reported costs of all portfolios. This means that for local government, I’ll commit to providing them with an additional £144m to support the costs of these hikes inflicted on the public sector by the UK government.

“By providing councils the equivalent of a 5 per cent national increase in council tax, the certainty I offer today should reduce the pressure on council tax decisions locally and help councils avoid inflation-busting increases.”

READ MORE: John Swinney rules out further hikes to flagship Scottish Child Payment - here's why

Cosla, the umbrella body for Scottish councils, has previously warned over a £265m “estimated direct cost” to local government due to the UK government’s decision to increase National Insurance employer contributions in the next financial year.

Deals with the Liberal Democrats and Scottish Green MSPs – as well as Labour’s decision to abstain on the Budget – meant the proposals will pass, despite the SNP not having a majority at Holyrood.

And Ms Robison said this “collaborative approach” highlighted how the Scottish Parliament was “designed to work”, with parties “negotiating to agree solutions for the benefit of Scotland”.

But the Tories made clear they would not support the “rotten Budget” from the SNP Government.

Scottish Conservative finance spokesperson Craig Hoy said: “This is the wrong Budget for Scotland, it fails to tackle waste or deliver reform, it fails to reverse damaging trends on welfare and it fails to deliver growth.”

The Tory added that spending on welfare was now “the greatest risk to Scotland’s public finances”, as he told MSPs: “On current trends, the Scottish Budget will crumple under the weight of the Welfare Bill, and this is a political choice that has been taken by ministers.”

Scottish Labour finance spokesman Michael Marra said his party “will not stand in the way” of the Budget. But he added: “We desperately want to see Labour’s record investment improve delivery on the front line.

“But we will not vote for this Budget because we very much doubt that it will. Years and years of evidence tells us that that is the case, the complete lack of delivery.”

Labour’s key Budget call was a “change in direction” in Government, he said.

Intervening during Mr Marra’s speech, the First Minister said the “invitation is there for the Labour Party to be part of that big consensus, to do the right thing for Scotland”.

Mr Marra said there was “no evidence” Mr Swinney could build consensus.

Scottish Green finance spokesman Ross Greer hit out at Labour’s decision to effectively wave through the Budget by abstaining.

Mr Greer accused Mr Marra of “a truly barnstorming defence of having had the opportunity to achieve something for the people of Scotland, but turned it down”.

The Green MSP went on to say his party passed up the chance to “give the SNP a bloody nose” in favour of striking a deal.

“I can list a long list of achievements for people and planet as a result of the Greens engagement in this Budget, compared to a Labour Party that got everything it asked for out of this Budget, because it simply asked for nothing,” he said.

A UK government spokesperson said: “The Budget delivered more money than ever before for Scottish public services and the Scottish Government receives over 20 per cent 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.”