Having cut Scotland’s resource budget by 5.2% and capital budget by 9.7% this year, the UK Government has been urged to provide additional funding for public sector pay deals or the SNP Government may be unable to fund pays increases without cuts to public services.
Last year’s UK Spending Review, which determined the majority of the current Scottish Budget, did not take into account the level of pay increase recently proposed by the independent pay review bodies and assumed that inflation would be only 2.4%. It’s now four times that!
In a letter to millionaire Tory Chancellor Nadhim Zahawi - who was once famously caught out billing the taxpayer for heating his horses’ stables - Scotland’s Deputy First Minister John Swinney MSP warned that the UK Spending Review did not consider the wider effects of rising inflation.
Without any further funding, Scottish Ministers may only be able to propose similar pay rises by reducing budgets elsewhere, which would have a knock-on impact on the public sector’s ability to respond more widely to the cost of living crisis and recover fully from the pandemic.
Kenneth Gibson MSP said:
“Last year’s UK Spending Review did not take account of the levels of pay uplift now proposed or indeed the wider effects of inflation, meaning this year’s Budget is not based on the figures that should have been used.
“It’s also important to bear in mind that unlike the UK Government, Holyrood only has restricted borrowing powers and a limited ability to raise funds - VAT, fuel and excise duties, National Insurance etc all being reserved to Westminster.
“In addition, the lack of additional funding for public sector pay deals via the Barnett Formula means the SNP Government would be forced to cut the very public services people work in, in order to offer the uplifts we would all like to see.
“Scottish Ministers have been placed in an impossible position and it more than suits the Tories to make it look as if Scotland couldn’t survive on its own, while we perfectly well could if we had the full powers of independence.”
Mr Swinney's letter to the Chancellor can be read here.
On 15 July, the Finance Ministers for the three devolved governments wrote to the Chancellor outlining economic areas of concern ahead of the forthcoming UK Budget.