Doctors' and Dentists' Remuneration - 2025-2026 pay round: Scottish Government's written evidence

D. Resources , Affordability and Pay

34. This chapter sets out the financial context including assumptions on funding available in 2025-26.

Overall Funding

35. The Scottish Government published its 2025-26 Budget on 4 December 2024 which sets out over £21 billion investment in health and social care services.

36. If approved by Parliament, in 2025-26 more than £16.2 billion will be provided to Health Boards to deliver front line and other key services, and this includes funding to honour our commitments to fair pay settlements for our health workforce. This represents a 3% cash uplift and a real terms increase on Health Board baseline funding (0.6%).

37. The Scottish Budget has been set against continued and unprecedented challenges to public finances. The Scottish Government has been clear that the extent of challenges will not be addressed in a single year.

38. The overall resource block grant position represents only a 1% increase in real terms for resource against the latest 2024-25 budget. At the same time, the drivers of spending growth to ensure the safe delivery of public services and social protection – including demand pressures on the health service – remain significant.

39. There are also further costs and significant new risks to be managed – including the increase in employers’ national insurance contributions which will create additional pressures for the public sector, businesses and the third sector across Scotland, with no certainty at this stage on funding from the UK Government.

Affordability - the funds available

40. As outlined above, Health Boards will receive a 3% uplift on baseline funding in 2025-26. This is to meet the expected costs of 2025-26 pay in line with public sector pay policy (as set out in the section below) and also provides an inflationary uplift to support non pay budget lines.

41. Despite this funding increase, significant financial and operational challenge remains. The NHS Scotland Finance Delivery Unit, commissioned by Scottish Government continues to work with all NHS Boards to drive sustainable improvement.

42. This includes supporting delivery of a minimum of 3% recurrent savings for NHS Boards, reviewing all local, regional and national opportunities, and setting out the medium to long term financial forecast assumptions for NHS Scotland to support delivery of longer-term financial sustainability.

43. Prevention, early intervention and reform remain critical to delivering an effective, efficient and sustainable health and social care system.

Public Sector Pay

44. The Public Sector Pay Policy for 2025-26 sets out multi-year pay metrics of a 9% pay envelope covering 2025-26, 2026-27 and 2027-28.  This is set against an expected inflation forecast of 7%, ensuring a level of pay restoration.

45. Flexibility is provided for employers to configure three-year proposals within the 9% pay envelope, provided they have a fiscally sustainable approach. The policy states any employer that does not agree a three year pay deal will be restricted to a maximum 3% pay uplift for 2025-26.

46. The Pay Policy balances flexibility with fairness and sustainability, and offers multi-year pay metrics above forecast levels of inflation from 2025-26 to 2027-28. It revises the multi-year Pay Policy issued in May 2024, acknowledging both the revised fiscal context following the UK Budget and updated inflation forecasts.

47. Against this backdrop, the 2025-26 budget includes provision for a 3% pay uplift across all portfolios including Health & Social Care.

48. The expectation set out in the pay policy is that public sector employers negotiate multi-year deals with trade unions and staff representatives within the parameters set out in the policy. Any costs beyond those budgeted is not affordable and would result in additional system and financial pressure.