Letter to John Swinney, First Minister: Autumn Budget 2024 – employers’ National Insurance contributions

John Swinney MSP, First Minister

Scottish Government

12 November 2024

Dear First Minister

Autumn Budget 2024

As you have recognised in your recent public comments, the Chancellor’s intention to increase employers’ National Insurance contributions will have a significant impact on the voluntary sector in Scotland – to the tune of an estimated £75 million per year. This puts our sector’s essential services, jobs, and organisations at risk.

SCVO – along with our sister organisations across the UK – will continue to put pressure on the Treasury to mitigate the impacts of her decision on voluntary organisations in the same way as for public sector employers.   I welcome the support of your government in calling for the UK Government to meet the costs of the policy to the voluntary sector in full, and in particular for your message that the UK budget must not be balanced on the backs of Scottish charities.

As you will be aware, many voluntary organisations deliver essential services and support for people and communities across Scotland through public sector grants and contracts.  They play an instrumental role in the delivery of public services and must be treated equally to other public service providers.  For example:

Four Square (Scotland) is a local Edinburgh charity supporting people who face homelessness. They employ around 120 people and their turnover is less than £4m. They deliver public services on behalf of the local authority.  Four Square estimates that the increase in employers’ NI will mean £67k additional costs to them.  They have very limited options for finding the money for those unexpected costs, and are considering whether they can afford a cost of living salary increase for staff in April 2025; or whether they need to cut posts.

It is also vital that we do not overlook the impact that the proposed changes will have on voluntary organisations not in receipt of public funding, whose services to our communities are none the less vital.  As just one example:

The Scottish SPCA, Scotland’s oldest and largest animal welfare charity, estimates that the sudden cost they will face will be £400,000 per year.   The 185 year old charity rescues, rehabilitates and rehomes domestic and farmed animals across Scotland, rehabilitates and releases wild animals, works in communities providing pet food and veterinary support to those in need plus a wealth of advice and guidance, and is funded entirely by voluntary donations with no Government funding, despite having statutory powers.  It responded to an average of 209 reports of an animal in need, every single day last year, and has seen demand for its services steadily increase, with the charity recently launching an urgent fundraising appeal after the largest single influx of dogs in their 185-year history, rescued from squalor, neglect and abuse across Scotland.  To put the additional National Insurance cost into context, £400,000 is almost double the cost of feeding all the animals in their care across Scotland for a year.  It’s the cost of running one of their mid-sized Animal Rescue and Rehoming Centres, for almost a year.  It’s the cost of running their Animal Helpline, for more than half the year.  It’s the cost of operating their nationwide frontline animal rescue team for three months of the year.

That is why it remains my hope - and determination – that the Chancellor can be convinced to include all voluntary sector employers in the mitigations proposed for the public sector, and we are grateful for your support in calling for this.  In the event that our joint efforts are successful, we will be pleased to work with you in considering how any increase to the Scottish block grant might best be distributed to ensure that it reaches Scotland’s voluntary organisations in a timely manner.

We must be prepared for all eventualities, however. It is on this basis that I urge you to ensure that, come what may, grants and contracts awarded by the Scottish Government and its agencies, and other public bodies, are uplifted to meet the costs associated with Treasury decisions set out in the Autumn Budget 2024, as well as inflationary pressures. We look forward to working with you on this as part of the Scottish budget process, and development of the multi-year spending review.

With costs climbing, funding falling, and demand for services increasing, our sector already faces a crisis. These pressures cannot be added to.

I look forward to receiving your response in due course.

Best regards

Anna Fowlie, Chief Executive