'Urgent clarity' needed on how Scotland pays for public sector 15% tax rises after UK Budget

Ms Robison said this would cost the Scottish Government around £500 million, and argued the funding for this should not be taken from the £3.4 billion extra announced for Scotland in Wednesday’s Budget.

In her Budget, Chancellor Rachel Reeves increased employer national insurance contributions by 1.2 per cent to 15 per cent. She also lowered the threshold at which this starts being paid from £9,100 to £5,000.

However, this also means the Scottish Government will be paying out more in employer national insurance contributions for public sector workers - something Ms Robison estimates will cost £500m.

In Wednesday’s Budget, Ms Reeves said the Scottish Government would be receiving an extra £3.4bn in Barnett consequentials, which they say is the biggest funding deal since devolution.

However, Ms Robison said clarity was needed on whether the Government would have to set aside money from this extra funding for national insurance contributions.

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Speaking to BBC Good Morning Scotland, Ms Robison said: “We were told by the Treasury yesterday it’s not part of the £3.4bn, so I am concerned to hear what the Chancellor said.

“We absolutely need to see the costs fully covered. This could add £500m in costs for the public sector unless it is fully funded.

“The public sector is larger in Scotland and we need to see it fully covered, not just through Barnett consequentials. It leaves a big question mark and I am seeking urgent clarity on this today.”

Ms Robison has argued any money to cover the national insurance contributions needed to be “fully funded” as the Scottish public sector is bigger proportionally than that of the whole of the UK.

Economists at the Fraser of Allander Institute, based at Strathclyde University, said they understood the funding would be on top of the Barnett formula funding.

Benjamin Cooper, a knowledge exchange associate at the institute, said: “The Treasury will also provide compensation for the higher staff costs associated with the changes to national insurance contributions for public sector employers, with our understanding that will be additional to the £3.4bn announced today.

“As aforementioned, the reason for this significant uplift in spending is due to much of the spending commitments outlined by the Chancellor being in areas that are currently devolved.”

Mr Cooper added: “With a much larger share of public sector workers in Scotland and more generous pay deals in recent years, it is likely that much of the discussion will centre on how the Scottish Government will respond in their own December Budget.”

HM Treasury has been approached for comment.