14th September 2022

Dear Colleague

A key tenet of our Pay Attention campaign is that the Scottish Government, together with COSLA, can afford our pay claim.

Key Points:

• The Scottish Government has significant resources, a Scotland Reserve and borrowing powers
• Scottish Government has considerable tax raising powers for raising revenues beyond 2022-23
• Education (and Local Government) should be higher priorities for the Scottish Government
• Members need to take action to protect their pay levels, as others have successfully done

The Scottish Government has significant resources, a Scotland Reserve & borrowing powers

The Scottish Government has a Total Managed Expenditure (TME) in 2022-23 of £56.4 billion.

Scotland Reserve

The Scottish Government has a “Scotland Reserve” that allows funding to be carried over from one year to the next. The provisional out-turn statement by the Scottish Government in June 2022 reported: “I can report that the provisional fiscal outturn for 2021-22 is £47 billion against a total fiscal budget of £47.6 billion.

The remaining budget of £650 million, which represents just over 1% of our total budget has been carried forward in full through the Scotland Reserve.”

The 2022 Scottish Budget states that it will draw down £179 million from the Scotland Reserve, and the EIS understands that the Budget process has also drawn down a total of £511 million. This means that there is £139m still unallocated in the Scotland Reserve.

Borrowing Powers

The Scottish Government can also borrow money. The Fiscal Framework Agreement with the UK Government states:

“Under this agreement, the Scottish Government will have the power to borrow up to £600m each year within a statutory overall limit for resource borrowing of £1.75bn.” 

The 2022 Scottish Budget states that it will borrow £15 million in ‘Resource’ and £450 million in ‘Capital’.  

It should be noted that the Scottish Budget 2022-23 showed that the Scottish Government borrowed £319 million in ‘Resource’ and £450 million in ‘Capital’ in 2021-22.

In August 2022, the Scottish Government published a GERS report and the accompanying press release stated:

“The Government Expenditure and Revenue Scotland (GERS) 2021-22 statistics show Scotland’s deficit fell by 10.3% – compared to a drop of 8.4% for the UK.

Revenue rose to £73.8 billion, up a record £11.1 billion from the previous year, while public spending fell by £0.9 billion to £97.5 billion.”

“Today’s figures show Scotland’s fiscal position is recovering faster than the UK’s, with a huge fall in the annual deficit thanks to the largest increase in revenues on record.”

The same GERS report also reported that “Total (Public) Expenditure per Person” in Scotland in 2021-22 was £17,793 whilst it was £15,830 in the UK for the same period.

In addition to this, the Scottish Government announced on 7th September that it had decided to make £500m in savings to the 2022-23 budget to deal with inflation and public sector pay.

It should be noted that the Scottish Government has already found the funds to sustain the teachers’ 5% pay rise, it is only the balance that is outstanding. The Scottish Government has also already earmarked the funds to pay the local government staff final pay offer – which we believe to be equivalent to a 5-11% pay increase depending on the post.

The EIS, therefore, believes that the Scottish Government currently has enough funding to afford the teachers’ pay claim, and it still has scope to borrow more and allocate more drawn down funds this year. The EIS believes that increasing public investment should be a greater priority than reducing the Scottish Government’s annual deficit faster as the GERS statement implies. 

Significant tax raising powers

Since devolution, the Scottish Parliament has significantly increased its tax-raising powers. In 2021-22, the GERS report showed that devolved taxes raised over £19 billion.

Scotland currently has the following tax-raising powers:

• Council Tax
• Non-Domestic Rates
• Land and buildings transaction tax
• Scottish landfill tax
• Non-savings and non-dividend income tax

In the future, it is agreed with the UK Government that it will have increased social security revenues, as well as air passenger duty, aggregates levy and VAT assignment.

The EIS has previously called for higher levels of taxation and consideration of a tourist tax by Local Authorities.

Unison has recently considered how the Scottish Government and Local Authorities may increase their revenues and have published “indicative proposals” as summarised below in a Scottish Left Review article:

• ending or cutting the £279m-a-year Small Business Bonus Scheme;
• raising the land and buildings transaction tax (LBTT) by 10% to raise £40m;
• a bigger surcharge on second home sales (a part of the LBTT) to raise £56m;
• cutting the threshold (to £40k) for a higher rate of income tax to raise £700m;
• council tax reform and changes to raise £70m;
• local tourism taxes;
• introduction of land value uplift tax; and
• Introduction of a new local inheritance tax to give councils £200m more a year.”

Education should be a higher priority

Whilst education was the focus of the 2016 SNP Parliamentary manifesto, the 2021 manifesto pivoted towards social care and health, possibly as social security was devolved to Scotland in the Scotland Act (2016).

As the Scottish Parliament’s research service (SPICe) blog stated in June 2022:

“By prioritising health and social security as it has, other parts of the Budget will be squeezed. For example, Local Government’s “core” resource budget is projected to be cut by 7% in real terms over the period.”

Public spending priorities are ultimately the choices of the Scottish Government. We believe, however, that the Scottish Government needs to invest more in Local Government and education to make up for the recent lean years of funding which have reduced resources and specialist support within schools.

Scotland can afford better- Teachers need to act collectively and decisively

Some of the measures outlined have already raised funds this year for public sector pay settlements, some we believe are still possible to implement, whilst others we believe require political will to implement over the medium-term to sustain public investment.

The Support Staff unions are in the process of settling their pay claim with the Scottish Government/ COSLA, with a final pay offer that was four times the value of the opening offer. 

The EIS believes that the power for realising the teachers’ pay claim lies with teachers. However, if EIS members do not act collectively and decisively then the Scottish Government will prioritise the best pay settlements for those who fight hardest to protect their pay.

Note: The EIS is not affiliated with any political party

This Pay Bulletin has been sent to you to help keep you informed about our Pay Attention campaign.

If you have already voted - great!

If you've not voted, we will be sending you a separate email soon with your individual voting codes.

0131 225 6244
enquiries@eis.org.uk 
46 Moray Place, Edinburgh, EH3 6BH
www.eis.org.uk

To unsubscribe email membership@eis.org.uk with the subject line unsubscribe from member bulletin.