Scotland’s Health Secretary has urged Scottish Labour MSPs to back Government calls for public services to be exempt from the national insurance increase.

Chancellor Rachel Reeves announced an increase in the threshold paid by employers in her first Budget last month, estimated to raise more than £25 billion.

But the Scottish Government has stressed that public services should be shielded from the increase, which it has said would cost the public purse £500 million.

Our public services should not pay the price for Labour’s UK Budget

It is understood reimbursement will be subject to negotiation between the Treasury and the Scottish Government.

Ahead of a debate in Holyrood, Health Secretary Neil Gray has urged Scottish Labour MSPs to back his calls for reimbursement.

“We estimate that the UK Government’s national insurance hike could lead to over £500 million in costs for the public sector unless it is fully reimbursed,” he said.

“Our public services should not pay the price for Labour’s UK Budget – and I am asking MSPs across parties to unite and make that clear today.

“Scotland’s funding should be used for the benefit of the people of Scotland and the crucial public services we all rely on – it should not under any circumstances pay for the UK Government’s National Insurance increase.”

Mr Gray added: “Parliament should be able to speak with one voice and demand that the UK Government fully covers the costs of their own tax hike.

“The people of Scotland would expect nothing less.

“The question for Labour today is: will they stand up for Scotland – or will they stand up for the Prime Minister?

“Scottish Labour need to join with us to defend our public services – not defend the UK Government.”

A spokesman for the Treasury said: “With public services crumbling across the UK including Scotland, and an inherited £22 billion fiscal black hole from the previous government, we had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability.

“Health is devolved to the Scottish Government and it will receive additional funding on top of its record £47.7 billion settlement to support with costs associated with changes to Employer National Insurance.”

Scottish Labour deputy leader Jackie Baillie said: “The single biggest threat to Scotland’s NHS is the SNP’s dangerous incompetence, and no amount of deflection and scaremongering can hide that.

“While the SNP carps from the sidelines, Labour is delivering record levels of funding for Scotland, supporting the NHS and cleaning up the mess the Tories left behind.”

A Labour amendment to the motion is understood to say the changes in the Budget were “necessary” to fix the public finances.