Public sector bigger than before Covid under SNP

Times

17 hours ago

Scotland's public sector will remain more bloated than it was before the pandemic even if SNP ministers hit a target requiring some departments to cut one in eight jobs, experts have warned.
IPPR Scotland, a think tank, said a promise to protect and in some cases expand frontline roles while finding overall staffing reductions of 0.5 per cent by 2030 would mean exposed departments have to slash 20,000 posts to plug a projected spending gap approaching £5 billion.
However, even if the target is met this would 'not undo the increases in devolved public services since 2019', according to separate analysis published by the Fraser of Allander Institute, based at the University of Strathclyde.
The institute's independent economists also downgraded their growth forecasts for the Scottish economy and predicted 0.8 per cent growth this year, and just 1 per cent in 2026.
This is despite ministers claiming Scotland is a 'modern, high-growth country', an assertion the IPPR analysis said 'might be generously described as optimistic'.
Before Holyrood went into recess for the summer, the finance secretary, Shona Robison, outlined the need to tackle a £2.6 billion shortfall in day-to-day resource spending and £2.1 billion deficit on capital projects, which she blamed on 'Westminster austerity'.
However, critics lambasted the SNP for 'years of gross financial incompetence', with a significant proportion of the black hole explained by the creation of more generous devolved welfare payments and a ballooning and increasingly well-paid public sector.
The wage bill for the devolved public sector is close to £30 billion, which is about 55 per cent of the block grant funding from Westminster. Public sector pay is projected to reach £32 billion by 2029-30 even if the overall workforce shrinks.
The Fraser of Allander Institute said that although some of the increases in staffing were accounted for by the creation of Social Security Scotland to administer new devolved welfare payments, this did not account for most of the rapid expansion.
'It's laughable for SNP ministers to claim Scotland is a high-growth country based on the facts,' the Scottish Tory MSP Craig Hoy said. 'The reality is we're a high-tax, low-growth nation as a direct result of their policies.
'The nationalists' addiction to a bloated, inefficient public sector is the reason nobody has faith in their ability to make the cuts needed to plug the huge black hole they have created in Scotland's finances.'
Hoy added: 'Their failure to fully pass on the rates relief available to businesses south of the border, coupled with them making Scotland the highest taxed part of the UK, explains why the growth rate here is even lower than the anaemic rate Keir Starmer is presiding over.'
There were about 590,000 public sector workers in Scotland in 2024, representing 22 per cent of the workforce. The proportion is lower than in Northern Ireland and Wales but far higher than in England, where 17 per cent of workers are employed by the state.
The size of the public sector workforce in Scotland grew by 11 per cent between 2017 and last year, with average public sector pay almost 5 per cent higher than the UK as a whole.
Robison said last week that reducing overall staff numbers by 0.5 per cent, largely through 'natural attrition and recruitment controls', could lead to £700 million of savings.
Compulsory redundancies, she said, could be used as a 'last resort', reversing a long-standing ban. A 0.5 per cent reduction in the 550,000 workers for devolved functions would mean 11,000 full-time jobs being cut.
However, the IPPR said that as frontline jobs, which account for the vast majority of roles, were being protected, the axe would fall heavily on those that were not.
'Taken together, that would mean the rest of the devolved public sector facing staffing cuts of around 3 to 3.5 per cent per year or a drop of about 13 per cent by 2029-30,' a blog co-authored by IPPR Scotland director Stephen Boyd said. 'That amounts to around 20,000 jobs.
'Can the public-sector backroom bear cuts of that scale? Does the distinction between frontline and backroom make any sense? Are there really thousands of backroom public-sector roles that can be replaced by technology over the next four years?
'The Scottish government risks finding out that the answers to these questions are unlikely to be the ones they need to achieve a pain-free balancing of the budget.'
Ivan McKee, the public finance minister, said: 'It is clearer than ever that Scotland's economy is being impacted by challenging global trading conditions and uncertainty, conditions mirrored across the rest of the UK.'
McKee added: 'We are taking ambitious steps to grow the economy by pursuing new investment, building export potential and driving and capitalising on the Scottish innovation at the forefront of many key global industries.
'But we are doing all of this without the full economic powers of independence that are needed to fully address the issues facing Scottish businesses. We need decisive action from the UK government to counter the damaging economic impacts of Brexit and business uncertainty. This includes reversing its decision to increase employers' national insurance contributions which, as the Scottish Chambers of Commerce has highlighted, is severely damaging business confidence, investment, growth and jobs.
'As set out by the finance secretary last week, savings rising to £2.6 billion in 2029-30 will ensure funding can be targeted at frontline services such as the NHS, social security, action to eradicate child poverty and other priorities. This includes our commitment to reduce annualised Scottish government and public bodies' corporate costs by 20 per cent over the next five years.'