The SNP leader of Glasgow City Council has written to the UK chancellor seeking 'urgent clarity' over the recent hike to National Insurance contributions which she claims will cost the council over £50 million pounds.
In a letter seen exclusively by The Herald, Susan Aitken said there is "continuing lack of clarity" over the increase in National Insurance contributions for public sector employers, adding that the hike will cost the council in excess of £50 million per year if implemented.
The council leader's remarks come as the national insurance (NI) rise for employers is set to raise £20bn a year, making it one of the biggest single tax-raising measures in history.
From next April, employers will have to pay NI at 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100 currently.
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The Glasgow City Council leader wrote to the UK Chancellor she is "deeply concerned" about the "significant financial impact" the hike will have if it is not fully funded for local government and the wider public sector.
In her letter, Ms Aitken stated: "For the City Council alone, the changes will add new budgetary pressures in excess of £50 Million-per- annum. Even were Glasgow to receive a particularly generous share of its allocation from the additional funding to Scotland announced in the Budget, an unfunded uplift would instantly remove half of what we could have hoped to expect.
"Furthermore, the impact of an unsupported uplift for Scotland’s Third Sector has been estimated at £75 million, calling into question the viability of numerous community- based organisations."
Scotland's Finance Secretary Shona Robison has also called on the Treasury to urgently address the “growing confusion and alarm” caused by the change ahead of the Scottish Budget which will be announced on December 4.
The Scottish Government estimates the hit to the Scottish budget as a result of the increase could be around £500m.
The changes have also sparked a backlash from businesses, charities and GPs, and warnings that the new measures risk job losses for low-paid staff in labour-intensive parts of the economy.
Last week BMA Scotland said the hike may create a “substantial blow” to Scotland’s GPs. Meanwhile, the Scottish Council for Voluntary Organisations said that the budget “fails to recognise the implications of these changes on the [voluntary] sector.”
The council leader Ms Aitken said the current lack of clarity on how these changes will be implemented, is making it "increasingly difficult to plan for and deliver".
In a final plea to Rachel Reeves, Ms Aitken said: "I urge you as matter of the utmost urgency to clarify how the UK Government intends to support the public and Third Sectors in adapting to the changes to National Insurance contributions and how you will ensure that this is not to our financial detriment."
On Sunday, Mr Reeves defended the rise in national insurance contributions, insisting that when Labour’s package of big tax, spending and borrowing increases it is “good for employment growth and wages growth”.
The UK Government has been contacted for comment.
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