Meeting of the Parliament 18 February 2025
The manifesto said, “taxes on working people”. The reality of the fiscal context was that there were difficult decisions to be made. This is not a magic bullet for public sector reform but, with one in six Scots on NHS waiting lists and with attainment falling in schools, we need additional public funds—although I also argue that we need reform and that we must modernise delivery of public services.
I am not going to stand here and say that the decisions were easy, because they were difficult. The choices that the Labour Government had to make to fix the foundations of the economy were not cost free. As someone who was an employer before coming to Parliament, I understand the difficulty that the measure will cause for employers who have to make payroll payments every month. I understand that, but the measure was necessary.
I also note that, although larger employers are being asked to contribute more, those who employ five people or fewer will benefit because the increased thresholds will remove altogether 57,000 SMEs from making national insurance contributions.
It is also important to note the international context. The rate of employer contributions puts us absolutely in the middle among countries in the Organisation for Economic Co-operation and Development. In Germany, employer contributions are 50 per cent higher than they are in this country and those in France are double what ours are.
The decision was not easy and was not one that the UK Labour Government wanted to make, but it was necessary—which brings me to the question about what SNP members are proposing as an alternative, because that is not clear. They reject the fiscal measure of increasing employer national insurance payments, but they also voted against the windfall tax and against changes to the loophole for people with non-domiciled status.
What would the SNP do differently? What fiscal measures would it take? This may be where we need to exchange stern looks. What would the SNP do? Would it increase personal income tax? That is not something that I would advise at this time, when people are struggling to make ends meet and to pay their monthly utility bills. Would SNP members increase employee national insurance contributions? That would have exactly the same effect. Would they put up VAT, which is the most regressive form of tax and the one that hits the poorest people hardest?
We have heard no alternatives from the SNP. The only contribution has been from the First Minister, who suggested that the UK Government should raise UK income tax to match levels in Scotland. It seems that the First Minister, who helped to negotiate the fiscal framework, has forgotten how it works. According to the Fraser of Allander Institute, that would reduce the amount of money that would be available to the Scottish Government by £636 million.
The SNP is not only calling for changes to national insurance contributions. In addition, SNP ministers and members have proposed almost £70 billion of additional public expenditure in the lead up to the budget without having a single idea about how to pay for that. There is no spending decision that the SNP is not in favour of, but it is without a single proposal about how it would pay for them. At the general election, the SNP called for an increase in borrowing to pay for additional public expenditure, but without any credible plan for how to deliver that.
There is a parallel with that—Trussonomics. Unplanned borrowing leads to financial chaos and to the instability that members on the Government benches are all too keen to criticise the Conservatives for.
Frankly, SNP members need to inject a little bit more honesty into their arguments. When it comes to passing their budget, they often charge members on the Opposition benches who have come forward with proposals for additional expenditure with saying how they would pay for it. Where would the money come from? What else would they cut? Those are the questions that I pose to them. If they do not want to increase employer national insurance contributions, what would they cut? They do not want to increase tax and, I presume, they do not want to increase borrowing. Are they saying that we should reject the £5.2 billion from the block grant that the measure delivers?