LAST week’s budget provided a vital injection of cash for the NHS and public services, but the jury was out on whether massive tax hikes and capital borrowing would grow our economy.

You can only increase your tax base, create more jobs and trade if you grow your economy. That said, prosperity has been too skewed to the wealthy over the last 14 years.

Labour’s acceptance of the Low Pay Commission’s recommendations is commendable. It's right for the National Living Wage (NLW) to increase, representing a rise of over £1,400 for the annual earnings of full-time workers on the NLW. This will help 3 million low-paid workers.

The budget also made a significant increase to the Scottish Government’s coffers with UK Barnett consequentials. We have an extra £3.4 billion in 2025/26 and £1.5bn in the current financial year.

How much of this money will reach frontline services that make a real difference to people’s lives? We’ll need to wait until December 4th to see the Scottish Government’s budget.

One area of concern is the increase in employers’ national insurance contribution (NIC) for workers. At present, employers pay 13.8% of employees’ earnings above £9,100 a year. From April, that will rise to 15% but, more significantly, the threshold will be lowered to £5,000.

That’s a big deal which will bring in £25bn for HM Treasury. Essentially, it’s an extra cost of £615 per employee per annum.

Businesses that pay less than £100,000 in NICs currently get a £5,000 employment allowance – a rebate from NIC – which is due to increase to £10,500 next year.

The increase in the employment allowance rebate means you need to have more than nine employees before the NIC hike kicks in. The UK Government has said changes to NIC will be mitigated for public sector employers but no-one else apparently.

This represents grim news for many charities next year. The Scottish Council for Voluntary Organisations (SCVO) estimate NIC changes will have a cumulative cost of £75m to the third sector in Scotland.

The charity sector employs 133,000 people across Scotland – that’s 5% of Scotland’s workforce. The Chancellor’s budget fails to recognise the implications of NIC changes on the sector.

The SCVO and its equivalent organisations from across the UK have written to the Chancellor of the Exchequer expressing concern for cash-strapped charities.

They said: “With costs climbing, funding falling, and demand for services increasing, our sector already faces a crisis. The additional costs placed on the sector by increasing employers’ National Insurance contributions will only compound this.

“As you navigate the significant financial challenges the country faces, we are confident that it would not be your intention to place them at the door of charities and community organisations. We are not asking for special treatment, just parity with the public sector.

“We are assuming this is an oversight or over-simplification by the media and we are therefore calling on you to urgently clarify this matter.”

Sadly, I don’t think this was an oversight. GPs operate as private partnerships and aren’t eligible for public sector relief either. They’ve already been given short shrift by the Chancellor.

The Scottish Government should use a small part of the £3.4bn Barnett consequential to mitigate NIC costs for charities.