There is a perception that Scotland is a socialist basket case where a mammoth public sector is showered with English money, and I’m here to tell you that this perception is racist, offensive and… not entirely without foundation.
The latest Scottish budget analysis from the Institute for Fiscal Studies (IFS) examines public sector pay north of the border and concludes that the burgeoning bill poses a ‘fiscal challenge’ to Scottish government finances. State employees now account for 22 per cent of the entire workforce, compared to 17 per cent in England, with an annual pay bill of £27 billion. Salaries for public sector workers, whose number has increased 11 per cent over the past seven years, represent more than half of all state spending in Scotland.
There are a couple of reasons for the sharp divergence from spending disciplines south of the border. For one, Scotland’s public sector is bigger in relative terms. For another, the Scottish government has made a conscious decision to increase remuneration. Hourly median pay is five per cent higher than the UK as a whole, so much so that public sector staff in Scotland are paid salaries comparable to their counterparts on the outskirts of London. This largesse does not buy the Scottish state any loyalty from its employees: ‘We do not find any evidence that larger increases in public sector pay in Scotland in recent years have boosted the retention of public sector workers.’
As at Westminster, ministers in the Scottish government brag about their fiscal machismo, enumerating the various pay hikes and spending spikes they have delivered for public services and their workforce. Their opponents whimpered about financial restraint and called for more modest settlements, but they took the tough decisions and got it done. Scottish ministers boast that they pay public sector workers more than other parts of the UK, crow that ‘the current teacher pay deal is the most generous since 2001’, and brag that Scotland is ‘the only part of the UK in which there has been no industrial action in the health service’ because ‘we never questioned the motivations of our workforce in seeking higher pay’. Challenged on the affordability of this approach, ministers assert that ‘our ability to pay for a larger public sector is well-evidenced’.
Input is the language of Scottish politics and outcomes a seldom-spoken dialect. There are only five verbs in the ministerial vocabulary: announce, consult, spend, publicise and forget. Later – much later – when a result still has not materialised or a failing can no longer be ignored, a sixth verb is broken out: review. Months pass, new plans are unveiled, fresh targets are set, lessons are learned, and then everyone goes right back to talking about inputs. The Scottish government is interested in the exercise of power but not the effects.
Public sector pay is not a question of who is more fiscally macho or who loves teachers more
The effects are not all that impressive. Scotland pays its teachers more? Great, but the Pisa study shows that pupils in England perform better in reading, maths and science. Health service salaries are more generous north of the border? Fabulous, but research from the IFS indicates that healthcare outcomes are worse in Scotland than in England. Perhaps it’s vulgar of me to ask, but are we getting value for money for these handsome public sector salaries? There is a deep sentimentalism around state employees – every nurse is an angel, every police officer a hero – but the purpose of public spending is to meet policy objectives, not to create employment on the most favourable terms for an ever-expanding state labour force.
Public sector pay is not a question of who is more fiscally macho or who loves teachers more, it is about targeting resources in a way that delivers desired outcomes. In Scotland, filling the pockets of public sector employees has become not only an end in itself, but one prized far higher than the delivery of services. Outcomes will not improve until they are prized far higher than input.
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