Businesses face an annual cost exceeding £1,000 per worker due to the Chancellor’s decision to raise employers’ National Insurance, new figures reveal.
According to analysis by the Scottish Parliament Information Centre (SPICe), employers pay an average of £890 extra in tax annually for workers on the real living wage (£26,228).
This figure climbs to £1,053 for those earning the Scottish median wage of £39,879.
The SNP, who commissioned the analysis, has called on Andy Burnham, expected to become prime minister later this month, to reverse the employers’ National Insurance rise.
Chancellor Rachel Reeves implemented the rate increase and lowered the tax’s starting threshold in 2024, following Labour’s landslide election victory.
SNP MSP Laura Mitchell said: “Andy Burnham must, as a priority, scrap the Labour Party’s national insurance tax hike, which has destroyed jobs and cost Scotland’s businesses huge sums of money.
“This was an incredibly short-sighted Labour Government policy which has created a high-cost, toxic environment for businesses across Scotland and the UK – cutting jobs, squeezing wages, reducing investment and choking off economic growth.
“Analysis now shows that this policy is costing business in Scotland around £1,000 per employee – is it any wonder why employment is up and fewer vacancies are opening. That is the cost of Westminster.
“Westminster policies have wiped billions of pounds from Scotland’s economy, causing unemployment and the cost of living to soar.
“It’s clear Scotland needs the full powers of independence so we can build a stronger economy and a better future.”
Speaking in March, Ms Reeves acknowledged a "valid argument" against her decision to increase employers' national insurance contributions, particularly as youth unemployment approached one million.
However, the Chancellor maintained that the 2024 policy was essential for channelling funds into vital public services.
Appearing before Parliament’s Treasury Committee, Ms Reeves said: “We did make the decision to increase national insurance in my first budget and that’s because we needed to properly fund public services, including the National Health Service, which got a £29 billion-a-year uplift.
“So, I do recognise, and it’s a valid argument to say that that should not have happened. But if that didn’t happen, we wouldn’t have been able to put the money into the NHS and reduce waiting lists.
“And reducing waiting lists in the NHS is also good for business, because it means that more people are available for work, and the workforce is is healthier.
“But I do recognise there are particular issues around youth unemployment.
“A lot of that, with respect, we inherited with a big increase in the young people not in education, employment or training, but we are facing into that with actions coming on stream from next month.”
A spokesperson for Mr Burnham said: “Andy is focused on delivering good growth in every postcode, raising living standards and giving families breathing space by tackling rising costs. On tax, he is committed to the manifesto.”
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