'Bleeding taxpayers dry': SNP warned 'no evidence' higher pay helping to retain public sector staff

Analysis from the highly-regarded think-tank, the Institute for Fiscal Studies (IFS), has revealed public sector pay has increased in Scotland over a five-year period, despite no change across the UK, amid fears the trend is “problematic” for Holyrood’s Budget.

SNP finance secretary Shona Robison was forced to plug a £500 million funding gap in this year’s Budget, significantly caused by public sector pay deals that did not have allocated funding - with only 3 per cent hikes budgeted, but deals agreed at higher rates.

More than half of all devolved day-to-day spending is taken up with the pay bill, totalling £27 billion a year in Scotland. Between 2019 and 2024, public sector pay in Scotland increased by 5 per cent after adjusting for inflation, compared with no change in the UK as a whole.

READ MORE: Rising public sector pay bill makes spending squeeze 'more acute'

A newly-qualified teacher earns £33,594 in Scotland, 6.1 per cent more than £31,650 in most of England, while a newly-qualified nurse earns £31,892 in Scotland, 6.4 per cent more than £29,970 in most of England.

The Scottish Government has often boasted that public sector workers are better paid north of the Border. But the new research has found no evidence the high rates of pay in Scotland have boosted the ability to retain staff.

The study shows that using the latest data covering 2021 to 2023, “the fraction of public sector workers leaving over the course of three months was 3.9 per cent in Scotland, compared with 4.4 per cent in England”, adding that “this leaving rate is lower than in most other parts of the country except Northern Ireland”.

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But the IFS analysis adds “there is no evidence of the retention of Scottish public sector workers improving during the period in which pay has been increasing in Scotland relative to the rest of the UK”, adding that “pay is far from the only determinant of job retention”.

It states: “Indeed, if anything, retention has fallen [with the leaving rate rising], both in absolute terms and relative to England. Therefore, we do not see higher retention in public sector occupations in Scotland that could be straightforwardly linked to higher public sector pay in Scotland.”

The IFS analysis warns that “given the cost of increasing public sector pay scales across the board, it would likely be wise to target increases in pay scales at the parts of the public sector where recruitment, retention and motivation issues are most keen, and where additional pay may help to resolve them”.

READ MORE: SNP warned not to use workers as 'scapegoats' for cutting services in budget

Scotland has about 590,000 public sector workers, around 22 per cent of the Scottish workforce - slightly lower than the 24 per cent in Wales and 26 per cent in Northern Ireland, but considerably higher than the 17 per cent in England.

Since 2017, public sector employment in Scotland has increased by 56,000 - a rise of 11 per cent, a faster increase than in any other region of the UK except Wales.

Jonathan Cribb, an associate director at IFS, said: “Scotland has not only increased the number of public sector workers more quickly than other parts of the UK, it has also increased their pay more quickly.

“While these are reasonable priorities for Scotland, it adds to the Scottish Government’s fiscal challenges, given that funding from the UK government will not reflect these Scotland-specific decisions.”

Mr Cribb added: “It’s not obvious from the available data that higher public sector pay growth has delivered benefits in terms of improved staff retention.

“The Scottish Government should undertake or commission research to understand better the impacts of its pay policies, and consider targeting future increases in pay where there is clearest evidence of recruitment, retention or motivation problems.”

Conservative shadow finance secretary Craig Hoy claimed “higher rates of pay” for Scotland’s public sector workers “are bleeding taxpayers dry”.

He said: “Yet, as the IFS points out, there’s no evidence that this has delivered any real benefit or resulted in any increase in productivity.

“This is typical of the SNP’s complete disregard for taxpayers’ cash and their abject failure to deliver value for money. Hard-working Scots are paying more in tax, but there’s been no attempt by the SNP to rein in spending, to tackle waste on an industrial scale, or to improve public services.

“The pay bill they’ve presided over is frankly unaffordable, which is why emergency financial statements have become regular events under the SNP.”

Union leaders have called on the UK government to match Holyrood’s public sector pay deals, but warned over “higher workloads” and “unsustainable workplace pressures” for staff.

STUC general secretary Roz Foyer said it was “absolutely correct” for the Scottish Government to “reward the workers who continue to keep our public services running”, adding “the UK government would do well to match this”.

She added: “But as workers across the sector will attest to, it’s about more than pay. Workers continue to face higher workloads, unsustainable workplace pressures in addition to a decade-long wage stagnation, which takes a wrecking ball to any hard-fought wage rises.

“Over the past ten to 15 years, private sector pay has significantly outstripped public sector pay.

“If we want to retain our brightest and best and make good of the growth in our public sector workforce, we should ensure pay continues to increase and give workers the opportunity to help build the world-class public services we all desire.”

Finance Secretary Shona Robison said: “The Scottish Government is prioritising delivering high-quality services that people in Scotland need and the most valuable and important asset is our public sector workforce.

“People in the public sector including hardworking teachers and nurses are key. That is why Scotland has more frontline public sector workers than other parts of the UK and they are paid more, demonstrating the value placed by this Government on workforce, skills, quality and fairness.

“Our approach to pay balances fairness and affordability and each public body covered by the Public Sector Pay Policy must ensure that their pay proposals will be affordable within their overall financial settlement.”