Holyrood issues warning to UK Government over public sector pay deal funding

The Scottish Government has urged Westminster to provide additional funding for public sector pay deals, or risk an inability to fund equivalent offers without cuts to public services.

Deputy first minister John Swinney issued the warning in a letter to chancellor Nadhim Zahawi as he outlined concerns that last year’s UK Spending Review did not take into account the level of pay increases recently proposed by independent pay review bodies.

Mr Swinney – who has taken on the Finance and Economy portfolio while Kate Forbes is on maternity leave – also said the Spending Review did not consider the wider effects of rising inflation, and that without further funding, the Scottish Government may only be able to issue similar pay rises by reducing budgets elsewhere.

He wrote: “Further to the joint letter from devolved administration finance ministers to you on July 15, and in light of the UK Government’s subsequent announcements regarding public sector pay, I am concerned that no associated funding is being provided to meet these additional costs.

“Last year’s UK Spending Review, which as you know determines the majority of the Scottish Budget, did not take account of the levels of pay uplift now proposed or indeed the wider effects of inflation.

“The associated reduction in spending power across public sector budgets is deeply worrying for our public services and our capacity to respond to the cost-of-living crisis, which will undoubtedly bring renewed challenges through the coming autumn and winter period.

“Given our fixed budgets, our restricted borrowing powers and the inability to change tax policy in year, the lack of additional funding for public sector pay deals via the Barnett Formula means the Scottish Government could only replicate these pay deals for public workers in Scotland with deep cuts to public services.

“I would urge you to consider appropriate funding for public sector pay, and would welcome early discussions with you on this matter.”

A UK Government spokesperson said: “We have provided the Scottish Government with a record £41bn per year for the next three years, the highest spending review settlement since devolution.

“As a result, the Scottish Government is receiving around £126 per person for every £100 per person of equivalent UK Government spending in England over the next three years.

“We’re also helping to tackle the rising cost of living, protecting eight million of the most vulnerable families with direct payments of £1,200 this year, and providing additional payments to pensioners and disabled people.”

Scottish Labour’s finance spokesperson Daniel Johnson said it “isn’t acceptable for Scotland’s two governments to simply try and blame one another for their collective failures”.

He added: “It is the SNP who have for almost 15 years failed to value public sector workers or prioritise fair pay deals for them, all while the Tories have presided over a massive transfer of wealth to top earners.

“To fix this we need an economy that is growing and relentlessly focused on giving everyone a chance to succeed. Neither the SNP or the Tories are willing or able to use the powers at Holyrood or Westminster to do that.

“Scotland needs a fresh start with Labour.”