Scottish First Minister Humza Yusuf will have to find money for a pay rise in the existing budget. Photo: Watty Chung
Public services in Scotland are facing drastic budget cuts after it emerged that new UK Treasury funding would not go to Holyrood to help pay for the huge pay raise handed out by the SNP.
< p>Rishi Sunak on Thursday announced a new position in England's wage negotiations, after months of strikes, making a deal with teachers and issuing an ultimatum to doctors to accept a 'final' offer of six per cent.
However, in a move that experts have warned could cause unrest in the decentralized government, the prime minister insisted that the increase would come from existing budgets, not loans or tax increases.
Treasury sources have confirmed that this means the Scottish Government will not be sent new cash from payroll in England, as it would be if the department's spending increased to fund the increase.
He will leave. Humza Yousaf, the first minister, is having a headache over how to fund the unprecedented pay he has already provided to unions to avoid strikes north of the border.
The Scottish government last week agreed to increase the wages of junior doctors by 12.4% in 2023/24, a major final concession to avoid a strike this week in the already crisis-hit NHS.
The SNP ministers also agreed on a generous seven percent teacher allowance this fiscal year, which must now also be funded from existing budgets.
Rishi Sunak reached a salary agreement with the teachers and gave the doctors an ultimatum. Photo: Geoff Pugh
They are already having trouble balancing the books, partly because of the rising Scots-only welfare bill.
Liz Smith, financial spokesman for the Scottish Tories, said: «SNP ministers must be completely transparent to the public about how their pay deals for Scottish workers will be funded.»
SNP faced a similar dilemma last year when John Swinney warned that the lack of additional cash to raise wages using the Barnett formula used to determine transferred budgets would mean «a significant cut in public services.»
the devolved government spent around £900 million over budget at the end of the year on payment agreements «at the expense of other priorities» during the year to April.
Deals are yet to be reached this year with by groups such as the police, who received seven per cent in England and are demanding 8.5 per cent in Scotland.
Job cuts
Under Keith Forbes, the previous Chancellor of the Exchequer, the Scottish government planned to reduce the number of public sector workers in order to take control of the payroll. However, according to experts, this policy appears to have been abolished.
“If these [British] wage deals are funded from existing budgets, that is, cuts to other spending, there will be no repercussions for Barnett,” Ben Zaranko. said a senior research economist at the Institute for Financial Studies. “The Scottish government will have to do something similar – cut something else to fund higher payouts.”
SNP ministers have already been forced to make unpopular decisions to balance their budget this year, such as drastically to withdraw £46 million previously pledged to universities and colleges, causing an uproar in the sector.
Mr Yousaf suggested that a decision should have been made to fund pay increases for teachers who received a two-year package that will see a 14.6 percent pay increase.
Teachers south of the border said that they would accept a 6.5 percent increase, although the junior doctors rejected the 6 percent offer despite Mr. Sunak warning that it was «final.»
Mr. Sunak said he not prepared to increase taxes or loans to pay for more modest increases in England. He said the «significant» increase would instead be paid for through «savings and efficiency gains».
Fee increases
Additional cash will also come from increased fees for UK visa applications and migrants' use of the National Health Service. . However, they are not expected to bring additional funds to the Scottish government.
“If money is found from existing UK budgets, then there will be no additional money available under the Barnett formula and money will need to be found from the Scottish budget,” said Emma Congreve, Deputy Director of the Fraser Allander Institute. .
“The Scottish government is doubly troubled when it needs to find money 'within the year' because they cannot renegotiate any of their tax rates until the next fiscal year. Since borrowing is limited, the only option is to find money from existing budgets.”
She added: “Another way to do this is to reduce the size of the public sector workforce. So far, there is little sign that there is an appetite for significant job cuts with the promise of no forced layoffs.”
According to the Scottish Government, public sector workers north of the border are paid between four and six per cent more than in the rest of the UK.
A spokesperson added: «The Scottish Government will continue to evaluate public benefit agreements against the available budget and the amount has already been agreed.»
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