Scotland’s deputy first minister has warned that the nation faces “4 very tough years” as a result of weak financial development may power the federal government of first minister Nicola Sturgeon to chop to public-sector jobs and spending, and put it on a collision course with unions demanding above inflation pay rises.
John Swinney, who’s performing finance cupboard secretary, needed to revise elements of the Scottish authorities’s spending plans twice final yr, to accommodate increased than anticipated wage settlements with public sector staff.
Whereas most accepted Holyrood’s revised pay affords, instructing unions rejected a proposal of 5 per cent and went out on strike, whereas members of the Royal School of Nursing union have voted to reject the 7.5 per cent in 2022/2023 that was agreed by the remainder of the well being service.
“We have to resolve these points however there are limits [because] I can’t spend cash I don’t have,” he mentioned in an interview on the Scottish parliament.
He added that whereas the federal government sympathised with staff who wished to be compensated for the excessive value of dwelling: “Now we have to reside inside our means as a result of we’re required to steadiness the price range.”
In December, the Scottish Fiscal Fee, Scotland’s spending watchdog, forecast that development can be weak for the approaching 5 years, predicting that it might be simply 1.7 per cent in 2022/23 and simply 1.5 per cent in 2027/28, which might additional constrain the federal government’s potential to generate income.
Graeme Roy, chair of the fee, mentioned long-term structural points, similar to an ageing inhabitants, would maintain again’s Scotland financial prospects relative to the remainder of the UK.
Beneath a mixture of the Barnett formulation — which is utilized by the UK Treasury to find out the annual block grants given to the devolved nations for spending on public companies similar to well being and social safety — and the taxation regime, the Scottish authorities was on account of obtain an additional £1.7bn for day-to-day spending in 2023-24. However that is set to be eroded by inflation to simply £279mn in actual phrases, leaving the federal government with no possibility however to chop important companies if it wished to fund larger pay will increase.
The devolved administration might have managed to keep away from winter stoppages within the NHS, however members of the Royal School of Nursing are holding out for the next pay supply — though they agreed to carry off strikes whereas talks are persevering with.
Members of the Instructional Institute of Scotland (EIS) union, in the meantime, are demanding a ten per cent pay settlement. The union mentioned it might “by no means” settle for the federal government’s 5 per cent supply, which it mentioned quantities to a 9 per cent discount as soon as inflation is taken into consideration and training has been disrupted by walkouts since late final yr and are on account of go on strike once more on February 28.
As a substitute of spending extra on wages, Swinney mentioned the Scottish authorities wanted to speed up reforms to “redesign” its public companies.
“There are constraints in public spending and there are reductions having to be made,” he mentioned. “If I pay a ten per cent pay enhance, I simply add to the dimensions of that downside.”