CONFUSION over Scottish and Welsh public finances arose today as the Treasury admitted it was in talks with both administrations about additional funding for the public sector.

The public sector in England is exempt from the rise in employer National Insurance (NI) contributions announced in last week’s Budget, but not in Scotland and Wales.

Following Plaid Cymru’s concerns raised with the Star about potential funding shortfalls in Wales, it emerged the cost to the public sector in Wales could be as much as £380 million and £500m in Scotland.

Plaid Cymru and the Scottish National Party (SNP) have urged the UK government to fully compensate public-sector employers in both countries for the increase in NI contributions.

Plaid Cymru’s Mabon ap Gwynfor has warned that employers such as the Welsh NHS and local authorities are already “under immense financial pressure.”

The Welsh government told the Star it was expecting additional money from the UK government to cover the cost of the NI contributions employer hike, over and above the amount allocated in the UK Budget.

A Treasury spokesperson said: “The Welsh government will receive additional funding on top of the £3.4 billion of Barnett consequentials announced at Budget to support them with the costs.”

The issue will be raised in the Senedd tomorrow, during a Welsh Conservative-led debate on Labour’s UK Budget.

The Scottish government has also demanded answers from Chancellor Rachel Reeves over their “£500m question” on NI. 

SNP First Minister John Swinney posed the question last week after it emerged that Ms Reeves’ decision to increase employers’ NI contributions could come with a half-billion bill for the Scottish public sector.

Labour Scottish Secretary Ian Murray appeared to suggest last week that additional cash would be made available for public services to cover the hike, while the chancellor said the cash was already within the £3.4 billion boost to the Scottish block grant next year.

SNP finance secretary Shona Robison said: “We will be publishing our Budget for 2025-26 in just 31 days, and without a guarantee the National Insurance costs will be fully met by the UK government, we face a financial hole of up to £500 million.”