Cost-of-living crisis: Kate Forbes says unused £41m likely to be spent on public sector pay rises

Public sector pay rises in Scotland could partly be funded by a £41 million lump sum ministers received as part of efforts to alleviate the cost of living crisis in England.

Finance secretary Kate Forbes was asked what she planned to do with the money after it revealed the pot had still not been allocated almost a month after being announced.

She told MSPs that rather than being used to fund a specific scheme, some of the sum was likely to be needed to fund pay rises for staff in councils, schools and the NHS.

The delay in announcing where the money would be directed prompted accusations that ministers were “refusing to act” while thousands of households struggle to pay their bills.

Finance secretary Kate Forbes. Picture: PA

On May 26, the Treasury said Scotland would receive £41m in Barnett consequentials as a result of a £500m increase to the Household Support Fund in England.

This fund is aimed at vulnerable households in England, with Holyrood ministers told at the time to “urgently set out” how they planned to distribute this to low income households.

Giving evidence to Holyrood’s social justice and social security committee yesterday, Ms Forbes was asked what she planned to do with the cash.

She insisted that “every single penny” received from the UK Government to alleviate the cost-of-living crisis would be spent on cost-of-living measures in Scotland.

She said: “I believe that pay is directly one of our cost-of-living measures. So right now we're obviously engaged with a number of pay negotiations, quite rightly.

“We are conscious of other negotiations ongoing right now. I think you have to see pay as a cost of living measure.”

The finance secretary also said she felt it was prudent to keep some money in reserve due to the “extreme volatility” in the economy and rapidly rising inflation.

She said inflation could drive up demand for the Scottish Government’s existing measures to help people on low incomes and rejected the idea the money would “sit there unused”.

“The UK Government is absolutely adamant that it's not going to do anything further on cost of living right now, because of what they perceive to be the risks of contributing to inflation,” she said.

“So I can't foresee any further consequentials coming down the line. So I also think that we need to make sure that any funding that we have in hand is used well, but it's used to cover the rest of the year.”

Both Ms Forbes and public finance minister Tom Arthur declined to say if there would any further announcement on cost-of-living measures before Holyrood goes into recess at the end of next week.

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