Scottish Labor leader Anas Sarwar has said a “conversation” will take place between the UK and Scottish governments about the cost of increasing National Insurance contributions.

Scottish ministers say the tax rise, announced in the UK budget, could cost public sector employers in Scotland an extra £500m.

Public Finance Minister Ivan McKee said the lack of clarity over whether there would be compensation for this money was a “big unknown” ahead of the Scottish Government’s budget in December.

Sarwar told BBC Scotland’s The Sunday Show that the Labor Party had already committed to discussing the issue and that the chief secretary to the Treasury would be involved in the talks.

Rachel Reeve’s first budget as chancellor raised the National Insurance rate for employers from 13.8% to 15% and reduced the salary threshold above which it is paid from £9,100 to £5,000.

This could have a particularly large financial impact for the Scottish Government, which funds a proportionately larger public sector workforce than in the UK as a whole.

Sarwar said the Budget had delivered an extra £1.5bn for Scotland in the current financial year and a further £3.4bn next year.

Pressed on the issue of National Insurance compensation, Sarwar said: “That is why the conversation will take place between the Treasury and the Scottish Government.

“Something we committed to on budget day and not something that happened after the budget because we recognize there will be an impact, for example, on our national health service and that is not an impact we want to see.”

Sarwar has previously called for an end to the two-child benefit cap, which prevents most parents from claiming universal credit or child tax credit for a third child.

When asked if he was disappointed that there was no change to that policy in the budget, he said it wasn’t possible to fix everything at this time.

He added: “Actually, there are a lot of things we haven’t been able to address in this first budget because I think people understand that it will take more than one budget to fix a 14-year mess left by the Conservatives.”

Scottish Chancellor of the Exchequer Ivan McKee said the new money available to the Scottish Government did not completely ease financial pressures.

He said most of the extra £1.5bn in the current financial year would be used to pay for pay rises already agreed in the public sector and that there was a relatively small portion of that figure available for capital spending on things such as infrastructure.

On compensation for changes to National Insurance, he said there were mixed messages.

“It seems like part of the UK government is saying one thing, but Rachel Reeves, who is the chancellor, the boss at the end of the day, is saying another and that is already included in the money we have been allocated.” said.

“So that’s a big unknown.”

McKee refused to be told what would be in the Scottish budget on December 4.

But when asked if he thought any further tax increases in Scotland would be counterproductive, he replied: “I think it’s a very important consideration.”

The Scottish Conservatives said the chancellor had presented a “socialist tax-raising budget” that was “straight out of the SNP playbook and will hit hard-working Scots”.

Finance spokesman Craig Hoy continued: “Labour repeatedly said it would protect workers, but its decision to increase employers’ contributions to National Insurance will threaten workers’ jobs and their wages.”