Pay deals within the public sector, driven in large part by pay rises across Scotland’s NHS, and an implementation gap between government ambitions and delivery have led the independent watchdog to call for “urgent” reform to address an expected £1bn shortfall in next year’s budget.

Audit Scotland says recent pay deals across the public sector have exceeded government policy, and ministers will be unable to maintain public services in their current form.

In a recent report, it has urged the Scottish government to ‘act quickly’ to deliver services differently and support its workforce to manage this change, rather than trying to do more with less.

However, the government has spent more in staff than expected in the past two years – including meeting NHS staff pay increases – and now faces a £1bn gap in its budget for the coming years.

Yet with its ‘record’ 12.4% pay uplift for junior doctors, Scotland has managed to avoid strike action which have already cost Westminster around £1bn.

A 6.5% pay increase for most other NHS staff in Scotland has also avoided strike action from nurses and midwives, with the government saying they are committed to an overhaul of the NHS Agenda for Change pay structure.

With inflation, pay deals within Scotland’s public sector total £1.7bn more than the government had initially planned.

The national watchdog says better strategic workforce planning is needed as part of wider reforms.

Earlier this year, the Scottish government established the Ministerial Nursing and Midwifery Taskforce to ensure voices of experience across the profession inform the government’s action on staff shortages and long-term workforce planning.

As the NHS forms two thirds of Scotland’s public sector workforce costs, decisions around NHS Scotland have a large impact on the sustainability of wider public sector aims or changes.

Stephen Boyle, Auditor General for Scotland, said:

“Significant reform of the public sector – including its workforce – is needed to protect services into the longer term.

“That means better workforce planning and wider changes to how staff work within and across organisations.

“An approach to reform purely focused on controlling workforce numbers will not address workforce pressures and is unlikely to balance the public finances.”

Monitoring spending

With spending on nursing bank and agency staff growing in recent years, Audit Scotland says the government must monitor the impact this and other NHS workforce changes have on the affordability of services.

Colin Poolman, RCN Scotland Director, says this report underlines the challenges facing the Scottish government as it “tries to square the circle” on public workforce and spending.

He adds that with the nursing workforce pay “seriously eroded” by years of inflation, the government must find a way to deliver its pay uplift commitments:

“There are over 5,600 vacant nursing and midwifery posts in the NHS alone. Too many experienced nursing staff are leaving, worn down by the years of understaffing and underinvestment. And too few are choosing to study our safety critical profession.

“Long-term, sustainable reform is needed for our health and care services.

“The Scottish government must find a way to deliver on its commitments to reform the NHS Agenda for Change pay system and ensure the Nursing and Midwifery Taskforce delivers a robust and funded action plan to support retention, increase the numbers studying nursing and improve the workplace culture and wellbeing of health and care staff.”

Meanwhile, a Scottish government spokesperson said:

“Recent growth in the public sector workforce can be attributed to a range of issues such as the COVID-19 pandemic, significant new powers such as in social security, and the crisis in Ukraine.

“The Scottish government recognises that workforce costs – driven by a sustained period of high inflation – are now contributing to unsustainable budget pressures, as set out in the Medium Term Financial Strategy published in May 2023.”

The spokesperson added that public bodies themselves are “best placed to assess” both opportunities and necessary actions to ensure financial sustainability within their budgetary allocations:

“They are responsible for ensuring they have the right size of workforce to deliver what is needed and must balance the affordability of their workforce alongside prioritising efficiency and managing pay sustainably.

“Delivering high quality, sustainable public services is one of our key missions. That’s why we are working with public sector bodies to reform services, ensuring workforces are sustainable, efficient and meet the needs of the people of Scotland.”

In its report, Scotland’s public spending watchdog says that ‘close financial monitoring’ and regular engagement from the government with the NHS and other large public bodies is vital to reform.

Read more: RCN: Patients and staff suffering due to shortages; Winter funding for ambulance services; RCN: Staff need to see light at the end of the tunnel; Doctors ‘deeply concerned' for care homes over winter; Mr Yousaf: “Scotland is a great place to work”; Auditor General: Difficult choices for Scotland's NHS

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