Can the Scottish Government justify pay hikes that are well above inflation for public sector workers? Are higher levels of public sector pay in Scotland compared to England delivering the results they’re meant to?

Lobbing a polite little grenade into this debate is the Institute for Fiscal Studies (IFS), the respected public finance think tank. In a new report it suggests there’s no evidence significantly higher rates of public sector pay in Scotland have helped retain workers like teachers and nurses – a key Scottish Government rationale – and that, if anything, retention has worsened since public sector pay in Scotland rose relative to England.

This is probably not what Shona Robison wanted to hear. We spend £27bn annually on public sector pay, over half of devolved day-to-day spending, so the stakes are very high. Since 2019, says the IFS, public sector pay has risen by five per cent above inflation in Scotland. Not only are pay levels higher than in any English region, but proportionally more people work in the public sector here – 22 per cent of the workforce compared to 17 – so the impact on public finances of even small pay increases is hefty.

Inevitably this has major knock-on effects for other budgets. Last year, the Scottish Government got a shock when it realised what it would cost to implement the latest above-inflation pay hike it had agreed to, which was well above what it had planned for, so mid-year it announced cuts to pay for it.

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