Current status: Answered by Shirley-Anne Somerville on 24 February 2025
To ask the Scottish Government whether it will provide an update on the potential cost to the third sector in Scotland of the UK Government’s decision to raise employer national insurance contributions, and what plans it has to help alleviate any additional costs, including inflationary costs, arising from this decision that are facing voluntary organisations that are in receipt of it grants or contracts from it.
The actual cost to the third sector of the increase in Employer National Insurance contributions is difficult to determine given the diversity in size and employment numbers across the sector. However, in the joint letter from the First Minister and President of COSLA to the Chancellor on 3 January, which was supported by SCVO and a range of third sector organisations, they refer to SCVO’s estimate that the third sector will face additional costs of £75 million per year, plus wider inflation. We will continue to monitor the impact on the sector through the longitudinal survey we support through SCVO.
The Scottish Government has called upon the UKG to take an ‘actual costs’ approach to compensation for increased costs as a result of the increase in employer’s national insurance costs. In the absence of full funding we will be very restricted in the extent to which we can respond.
We recognise this may mean continued challenges for our third sector partners. We are aiming to assist the sector by improving notification of continued funding to third sector organisations and increasing the number of two year grants we can offer as part of our commitment to Fairer Funding.