Labour and SNP are paying commerce nothing but lip service

Chancellor of the Exchequer Rachel Reeves hopes changes to National Insurance will raise up to £25.7 billion (Picture: Carl Court/Getty Images)

The employers’ National Insurance (NI) contributions went up to 15 per cent on Tuesday, while the threshold at which employers are liable to pay NI contributions on employees’ earnings was cut from £9100 to £5000 a year, changes from which Chancellor Rachel Reeves hopes will raise up to £25.7 billion. It is a tax on jobs which will hit recruitment as businesses tighten their belts, and will also hit their customers as the cost filters through to prices.

As if that wasn’t bad enough, the Scottish Government’s changes to non-domestic rates, aka business rates, are rising too, with the rates for all companies in medium and larger-sized commercial premises increased by 1.7 per cent. As of Tuesday, retailers alone will be paying a total of £7.6 million a year more.

David Lonsdale, the Scottish Retail Consortium’s (SRC) director, put it very well. “The retail industry is set to be thwacked by colossal additional employment costs as a result of the recent UK Budget,” he said. “Public policy is loading new statutory costs onto the very stores which help underpin the health and viability of Scotland’s high streets and retail destinations.”

With big rises in council tax, the SRC correctly points out that taking money from all our pockets in tax at the same time as taking more from shopkeepers is a guaranteed way to accelerate the decline of our high streets, at a time when they are fighting for survival against the onslaught of home delivery services. In a recent survey, the SRC found that a 55 per cent majority of Scots supported holding a local referendum if their council proposes a big hike in council tax, and if you’re living in Falkirk, where the local authority recently agreed a staggering 15.6 per cent rise, I can see why. With an average rise of 9.5 per cent across Scotland’s 32 councils, it’s certainly something when Edinburgh’s eye-watering 8 per cent rise looks restrained by comparison. The SRC estimates the council tax rises alone will add £280m to domestic bills, and that doesn’t include the 9.9 per cent increase in water and sewerage charges.

I’m not sure a referendum is a good idea, with all the time and expense involved in setting them up, effectively putting local authorities in a financial limbo while a vote was being organised. But the principle of holding authorities properly to account for such raids on our piggy banks more directly than an election every five years is worthy of examination. The SNP must take the blame for the surge in council tax, with on-and-off freezes not properly backed with sufficient grants to cover rising costs, but so too should Labour councillors who kowtow to their union overlords by blocking efficiencies and refusing to countenance redundancies. It was the UK Labour Government’s rush to hand the public sector unions inflation-busting pay rises ─ happily copied by the SNP ─ without productivity agreements that resulted in the NI raid in the first place. When Labour and the SNP pay out, the rest of us pay the price.