Scotland’s public services will suffer if Chancellor Rachel Reeves does not fund the shortfall left by the hike in national insurance contributions, a leading trade union has warned.

Ahead of next week's Scottish budget, GMB Scotland has urged the UK Government to support the recovery of vital services.

Chancellor Rachel Reeves announced an increase in employers' national insurance contributions (NIC) while also lowering the threshold at which they start paying contributions.

The rate will increase by 1.2 percentage points to 15% from April next year and will now be paid on staff earnings from £5,000 rather than the current £9,100 level.

Following the announcement, the Scottish Government called for £500 million to cover the costs to the country's public sector.

But it is understood the offer being made to SNP ministers is between £295 million and £330 million.

Louise Gilmour, GMB Scotland secretary, told the Chancellor that Scotland's public services are not "fully insulated from the decisions of the UK Government" despite devolution.

READ MORE: 

Labour lacks 'basic competence' over NI hike, says Forbes 

Robison warns of cuts over Treasury offer for NIC hike 

Fraser of Allander: ‘limited room for manoeuvre’ in Scottish Budget 

In a letter to the Chancellor and Scottish Secretary Ian Murray, seen exclusively by The Herald, she said: "A Labour government - whether in Westminster or Holyrood - should aspire to strong and fairly paid public services.

“Most of Scotland’s public services and the pay, terms and conditions of public sector workforces are devolved.

“However, they are not fully insulated from the decisions of the UK Government of the day.

“Whether right or wrong, the increase in national insurance will limit Scotland’s recovery if it is not fully funded.

“It will not only limit investment and recovery in services already in crisis, but it will also limit our members’ ability to bargain for better pay in 2025.

“To rebuild, Scotland needs investment and strong public sector. I write to urge the UK Government to fully fund the increase in national insurance ahead of the Scottish budget on December 4.”

The union warned public sector workers had been “brought to their knees” from the previous Conservative administration.

Ms Gilmour said the UK budget was an “opportunity to rebuild”, she added, “the additional billions in Barnett consequentials is a decent start.”

Since the announcement, Scottish ministers have condemned the shortfall likely to be left with the increase to national insurance contributions.

Scotland’s Finance Secretary Shona Robison warned the around £300 million figures expected to cover the cost was “simply not good enough”.

She warned the calculated cost of the policy for the directly employed public sector is more than £500 million, increasing to around £750 million when costs including childcare, colleges and adult social care are included.

READ MORE: 

Poll: Scots call for National Insurance to be devolved 

National insurance rise to cost Scottish universities £45m 

National insurance hike to cost Scottish councils £265m 

The Herald also revealed that the cost to Scotland’s councils and universities s a result of the hike was £265 million and £45 million respectively.

Deputy First Minister Kate Forbes earlier this week highlighted estimated that Scotland faces more than £2 billion in higher taxes across the public and private sector next year because of the autumn budget. She said the increase was largely driven by the national insurance increase.

In the letter to the Chancellor, Ms Gilmour suggested the UK Government’s stance was because of Scotland’s larger public sector workforce.

“It is true that Scotland does have a bigger public sector workforce and better paid staff,” she said.

“But properly staffed services and a fairly paid workforce are not wasted expenditure. They are the foundation on which our communities and country are built.

“School support workers educate the next general with the skills to enter work. Health and social care workers look after our most vulnerable and keep workers in work.

“And cleansing workers keep our communities clean and liveable, so people have something to work for.”

The Fraser of Allander Institute, an economics research unit at the University of Strathclyde, also estimated the Scottish Government would be left around £500 million short as a result of the tax change.

Director Mairi Spowage said: “You could say, well the larger public sector in Scotland, the fact that it’s better paid, that’s sort of down to the decisions of the Scottish government.”

She warned it would “tough” for SNP ministers to cover the shortfall of around £150 million.

Spowage added: “It will definitely be challenging to absorb that in other parts of the budget.”

A UK Government spokesman said: “The budget delivered more money than ever before for Scottish public services and the Scottish Government receives over 20% 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.”