Just like England: public sector faces wage rises capped at 1%

By Eddie Barnes
Published on 02/12/2011 00:00

SCOTTISH public-sector workers should prepare to face 1 per cent pay rises over the medium term, similar to those planned in England, after First Minister Alex Salmond said the money was not available to provide more generous increases in salary and pensions.

Ministers warned there would be “serious consequences” for their own budget after Chancellor George Osborne’s announcement that he would restrict pay rises for the next two years, and Mr Salmond said the Scottish Government did not have the cash to pay for major pay increases.

Holyrood ministers set the pay for Scottish civil servants and quango staff, and have influence over the pay of teachers, police and NHS staff. On Tuesday, Mr Osborne revealed any increases in pay, once the current freeze ends, will be limited to 1 per cent, to keep costs down.

Documents produced by the UK government revealed that, for devolved authorities, “budgets will be adjusted on the assumption of comparable action being taken”. Mr Salmond said yesterday that he therefore expected the grant he receives from UK ministers to be reduced accordingly.

Asked by Labour leader Iain Gray to confirm that pay rises would be restricted to a 1 per cent, Mr Salmond said: “If he thinks we can find £500 million, then he better start telling this parliament where it is going to come from.”

A source close to the First Minister said: “We will have discussions with the trade unions, but these are the parameters we are working under.”

Finance secretary John Swinney has ordered a pay freeze to be extended beyond the end of this year, and he has promised that pay will increase modestly during the course of this parliament.

A spokesman for the finance secretary said: “Mr Swinney made clear in September that, following a pay freeze next financial year, we would look to increase salaries modestly within the public sector. That remains our objective, and the UK government is now coming into line with our own ambitions.

“We are seeking further information on the net effect of the Chancellor’s statement on the Scottish budget.”

However, Mr Gray accused the SNP of simply passing on the Conservative cutbacks in Scotland, without seeking to make any amendment themselves.

He said: “The Tories cut public-sector pay and the SNP implement the cut. The Tories cut pensions and the SNP implement the cut. The Tories cut public-sector jobs and the SNP implement the cuts, only deeper and faster. And the Tories cut capital expenditure and, yes, they implement that cut too, only deeper and faster.”

SNP ministers have said they are to impose the same increases in pensions contributions on public-sector workers as proposed by the UK government.

Chief Secretary to the Treasury Danny Alexander has told Scottish ministers they can go ahead with a delay in the increases, but that would result in their budget dropping by £8.4m a month.

SNP ministers claim that, with no headroom to do so, they have to push the changes through, despite having described them as a “smash-and-grab raid” on peoples’ pensions.

The spat came a day after an estimated 300,000 Scottish public-sector staff stayed away from work in protest at the changes to their pension package.

Labour refused to take part in proceedings at Holyrood on Wednesday, and called for the SNP government to reverse its decision.

Mr Gray said: “On pensions, public-sector jobs and pay cuts, 300,000 Scots took a stand yesterday and, yes, we took a stand with them. When is Alex Salmond going to stand up for what he says and stop just doing Tory bidding every time?”

Mr Salmond hit back, saying: “The way to stop this parliament and this government being hamstrung by the policies of the United Kingdom government is to give us the financial independence that we require in order to do that.”

He pointed out that the Scottish Government “uniquely in these islands” had brought in a policy of no compulsory redundancies for the parts of the public sector it controlled.

Mr Salmond went on to tell MSPs the SNP had “implemented the living wage across the public sector”.

And he told his Labour rival: “If Iain Gray wants us to get out from under Tory policy, then give this parliament, this government the financial and economic powers that we require in order to do that.”

On the pay deal, Scottish Labour’s finance spokesman Richard Baker said: “The SNP government is responsible for pay policy in Scotland, so it doesn’t need to slavishly follow what the Tories do – the SNP could, if they wanted, choose a different path.”

Mr Osborne’s announcement on further pay restraint in the public sector has been estimated to save him a further £1.7bn over the coming two years.

In Scotland, the pay bill represents nearly 60 per cent of all the funds spent by the Scottish Government.

The cost of increasing the pay bill was highlighted by a report by the Independent Budget Review group, published last year.

It showed that the Scottish Government would expect to have to pay out £860m over two years if it began to increase pay by 2 per cent from 2013 onwards.

At the same time, the Scottish Government budget is expected to remain roughly the same in real terms.

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