Equity and efficiency are the twin goals of European education policymakers, but there are tensions between these goals. This article illustrates these tensions within the school system of Scotland, drawing on two recent research projects: 'Fabricating Quality in European Education' (FABQ) and the Applied Educational Research Scheme (AERS) study entitled 'How do schools in Scotland measure their own performance?' It outlines the Quality Assurance and Evaluation (QAE) system developed in Scotland since the 1980s in line with neo-liberal policy approaches and describes the problems of inequity identified by a review of Scottish education by the Organisation for Economic Cooperation and Development (OECD). Case studies of schools illustrate how pressures for continuous improvement in attainment lead to practices that exacerbate inequalities. Ability grouping within schools can have similar consequences to those of 'racked' school systems in Europe that increase inequalities. The article emphasises that the tensions between equity and efficiency need to be acknowledged at national and European levels, and directly addressed as a policy problem.