By 1919 staff
Police Scotland has been left with a £10 million black hole as a controversial new employers’ tax rate kicks in.
Chancellor Rachel Reeves (pictured above) has raised the level of National Insurance Contributions (NICs) for employers, which critics have dubbed a ‘tax on jobs’.
This will cost Scotland’s police force an extra £25.3 million, and the Scottish Government has now confirmed it will fund only 60 per cent of this – or £15.2 million – leaving a significant shortfall.
In the new 2025/26 financial year, a one-off benefit from a lower pensions contribution rate will “bridge the gap”, before savings must be identified in 2026/27 on a recurring basis.
The Labour government at Westminster argues that the Holyrood administration is getting a record overall budget, as well as up to £330 million to compensate public sector organisations for the NICs change.
But the SNP government continues to demand full funding to cover the extra costs.
The total policing budget from the Scottish Government has been set at £1.621 billion, which is up £69.5 million (4.48 per cent) on 2024/25.
That means the force is in line for a spending increase in cash terms, even when the NICs increase is taken into account.
Chief Constable Jo Farrell told a meeting of the Scottish Police Authority (SPA): “There are some financial pressures, but at the same time we all recognise in this room that the fiscal position across Scotland and the broader United Kingdom is challenging.
“We are not immune to that. So it is for us to advocate strongly, and drive efficiency and the delivery of good-quality policing.
“I’m confident with this budget settlement, and with the plans within our three-year and annual police plan, and the skill and commitment of the whole workforce and you as an authority, that we will both deliver and ensure there’s a balanced budget.”
James Gray, chief financial officer at Police Scotland, added: “Everybody is aware that the employer National Insurance Contribution rates are going to go up at the start of the next financial year.
“For the SPA and Police Scotland, that means an increase or cost pressure of £25 million for the organisation.
“The position we have in the budget… is that this will be funded to the tune of 60 per cent by the Scottish Government, equivalent to £15.2 million. But that still leaves an in-year pressure of £10 million that we will need to find on a recurring basis to meet that cost.”
The bulk of Police Scotland’s budget is for day-to-day revenue spending, which is going up by £56.5 million from £1.419 billion to £1.476 billion.
Capital spending for equipment and buildings has also increased significantly in percentage terms from £64.6 million to £75 million – up £10.4 million.
David Threadgold, SPF chair
This has been made possible because Reeves handed Holyrood a record settlement, giving SNP ministers an extra £3.4 billion to spend in her autumn budget – while the more recent spring statement includes a further £28 million.
But Scottish Justice Secretary Angela Constance told the Scottish Police Federation (SPF) conference in March: “Recent changes to employers’ National Insurance costs, also known as a tax on jobs, made by the current UK Government impacts on all of our public bodies – and we have committed to funding 60 per cent of these additional costs in 2025/26, and I am well aware of the challenges facing Scottish public bodies in meeting total costs.
“The First Minister and the Finance Secretary have repeatedly called for these additional costs to be fully funded by the UK Government.”
However, SPF chair David Threadgold told her: “The risks to police officers, the organisation, and let us not forget the public, are significant and exacerbated by a chronic lack of funding to deliver the most basic of service in our country, made even worse by your government’s decision not to fully fund increases to employer National Insurance Contributions.
“Your response will undoubtedly be that the Chief Constable has a budget and she has to manage it, but without multi-year budget settlements, the ability to carry forward unspent revenue into the next financial year, or the ability to borrow money to address the chronic lack of capital budget, we simply cannot deliver policing in this country to a standard which we can all be proud.”
A UK Government spokesperson said: “Policing is a devolved responsibility and the budget delivered more money than ever before for Scottish public services.
“It is for the Scottish Government to allocate this across its own public sector and meet the priorities of people in Scotland.
“It will also receive additional Barnett funding on top of this record £47.7 billion settlement as part of support provided in relation to changes to Employer National Insurance.”