EDINBURGH (Reuters) - Scotland's devolved government will lift a cap on public sector wages to take account of the rising cost of living, one of a series of policy changes due to be announced on Tuesday, a Scottish government official said.
By allowing the wages of nurses, teachers and police to rise by more than 1 percent in Scotland -- a cap which has been in force in the UK as a whole for seven years -- Nicola Sturgeon's pro-independence government hopes to regain the political initiative after losing seats in the national parliament to Labour and the Conservatives in British election in June.
But it may also put more pressure on her government to use new devolved tax powers that Scotland has had since last year.
Scotland's parliament sets a portion of its own tax rates and bands and decides its own policies in areas including health, education and transport.
British households are feeling the pinch from inflation which is expected to rise to around 3 percent soon, outstripping average pay increases.
"The (Scottish) Programme for Government will make clear that the time has come to ditch the 1 percent pay cap for the public sector," a government source told the Sunday Herald newspaper
"The cap will go from next year, and future pay policy will take account of the cost of living. We need to ensure that future pay rises are affordable, but we also need to reflect the circumstances people are facing, and recognise the contribution made by workers across the public sector," the source said.
A Scottish government official confirmed the report.
Scotland's public deficit is equivalent to 8 percent of gross domestic product after being hit hard by a slump in the oil sector and a long period of higher government spending per head than in Britain as a whole.
Public sector unions vowed earlier this year to fight for a pay rise of at least 5 percent and for compensation for years of lost wages.
