Public Finances: Borrowing Costs

Graham Leadbitter Excerpts

Thursday 9th January 2025 Commons Chamber

[Darren Jones]

I very much agree. That is why fiscal stability and economic responsibility are at the heart of this Labour Government and the Chancellor’s agenda. Members on the Opposition Benches may want to pay attention to that.

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

There is no point beating around the bush: the Chancellor has just lost over £9.9 billion of headroom, and stands on the cusp of breaking her own fiscal rules. She said last year that she would not come back for more tax rises. Will the Chief Secretary be honest and admit, just as the former Bank of England rate setter Martin Weale said today, that this leaves only the option of more austerity? Will he level with people about when and where the next round of cuts will fall?

[Darren Jones]

As I said, the fiscal rules are non-negotiable. The only reliable sources on future financing will be the OBR forecast on 26 March, the conclusion of the spending review in June, and the Budget, which the Chancellor will present in the autumn. The hon. Gentleman mentioned austerity, but I remind him that this Labour Government have given the Scottish Parliament the largest real-terms increase in funding since devolution. He should be grateful for that.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Graham Leadbitter Excerpts

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

Government Members have talked about difficult choices. Not taking away the winter fuel payment from people, or voting to remove the two-child cap, might also have been difficult choices, but instead they have been easy targets. This Bill adds to those easy targets.

The Bill, presented under the guise of fiscal responsibility, is a thinly veiled austerity measure that will disproportionately burden Scotland and undermine our ability to deliver vital services to our citizens. The increase in employer national insurance contributions is touted by the Government as a necessary step to bolster public finances. However, closer examination reveals the stark reality: the increase will lead to a significant shortfall in Scotland’s public sector funding. We will be left grappling with the fact that the UK Government undervalued the cost of the measure by at least £200 million.

Scottish Government figures, corroborated by independent analysis from reputable institutions such as the Fraser of Allander Institute, paint a grim picture. The national insurance hike will cost Scotland more than £500 million, including a staggering £191 million burden on our already stretched NHS. That figure rises to an alarming £750 million when we factor in indirect employees in sectors such as childcare, GP practices and social care—sectors vital to the fabric of our society.

In Moray West, Nairn and Strathspey, a local firm with a number of care homes across the north of Scotland faces an £800,000 bill. It provides vital services to the community. To give another example, a local dentist has said that the increased cost of employment as a result of the Bill may force them to go private to recoup those costs. Finally, the Bill is a double whammy for GP practices. They face the national insurance hit, but by dint of being designated a public service, are not eligible for employment allowance.

The UK Government’s paltry offer of £300 million in Barnett consequentials is simply not enough to bridge the gap, and it fails to account for Scotland’s proportionally larger public sector, which employs 22% of the workforce, compared with 17% in the UK as a whole. Among other reasons, that is because in Scotland, we already have a publicly owned and managed rail service, and a publicly owned and managed water service. The funding disparity is a clear indication that the UK Government have given scant consideration to the unique needs and circumstances of Scotland. That includes the disregard demonstrated in the winter fuel payment debacle, which exposes a pattern of neglect, regardless of which party occupies the Government Benches. It is exactly this pattern of neglect and lack of understanding of Scotland by successive UK Governments that strengthens the case for Scottish independence, and for our ability to take decisions for ourselves, like every other normal country, on the delivery of public services and taxation that impacts us.

The impact of the Bill goes far beyond mere budgetary concerns. It will have a ripple effect across our economy, harming businesses, stifling growth and ultimately hurting the very workers it purports to protect. The Office for Budget Responsibility has cautioned that the increase will likely lead to lower wages and higher prices; effectively, the burden will be passed on to consumers, and the purchasing power of hard-working families will be eroded. We urge the UK Government to reconsider this damaging Bill, to fully fund the cost of this tax hike to public services in Scotland, and to engage in a meaningful dialogue with the Scottish Government, so that Scotland’s interests are protected.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

We have two remaining Back-Bench contributions. Colleagues who have contributed to the debate should consider making their way back to the Chamber before the wind-ups.