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11 September 2014

Salmond’s NHS claims have been shredded by the IFS

The biggest danger to the Scottish NHS is independence. 

By George Eaton

The Scottish Yes campaign has frequently been lauded for its positive, optimistic tone, in contrast to the rather dour No side. But the irony is that it’s only by turning negative that the nationalists have prospered. It was Alex Salmond’s warning that the survival of the NHS (a Scottish religion as much as an English one) was threatened by Westminster that allowed him to vanquish Alistair Darling in their second debate and to pull Labour voters into the Yes camp. 

The First Minister’s claims were, of course, nonsense. Health has been devolved to the Scottish parliament since its creation in 1999, meaning that the only person who could privatise (or cut) the health service is Salmond himself. Earlier today, Gordon Brown raged at his mendacity, threatening to stand for election to Holyrood unless he stopped peddling lies. 

That Salmond is indeed telling lies has been made clear today by the IFS, which has dismantled his claims with typically brutal efficiency. It first notes, as I did, that health is already devolved to the Scottish parliament and that “the Scottish NHS does not have to make more use of private sector providers just because the English NHS is”.

Then it points out that while health spending in England has risen since 2009-10, it has fallen in Scotland, noting that “the Scottish government has chosen to protect the NHS in Scotland slightly less than it has been protected in England. Spending on the NHS in Scotland has fallen by 1%.” Nor can this be blamed on cuts to Scotland’s block grant by Westminster. As the IFS points out, “the vagaries of the Barnett formula” mean that Scotland has had to cut overall public service spending by less than England. In other words, the decision to reduce NHS funding was a matter of choice, not necessity. 

Moreover, while cuts to the block grant will continue as part of the government’s deficit reduction programme (whether Conservative or Labour-led), the tax raising powers that Holyrood is due to receive under the 2012 Scotland Act mean that it will be able to shield health from austerity: “If it were to increase the Scottish rate of income tax by 1%, for instance, it would raise around £400 – £450 million a year. This would be enough to boost health spending by around 4%.”

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By contrast, independence, and all the risks that it would entail (such as higher borrowing rates and capital flight), would make it far harder for Salmond to protect the NHS. The IFS warns that even if the Scottish government’s optimistic oil revenue forecasts of £7bn a year (the independent OBR forecasts £3bn a year) are accepted, “its budget position would still be if anything slightly weaker than that forecast for the UK as a whole. If these more optimistic forecasts prove correct an independent Scotland would still need to borrow more or tax more than the rest of the UK if it wanted to increase spending on the NHS while protecting other services.”

The final judgement, then, is that the best way for the NHS to be protected is for Scotland to remain in the Union: “It is hard to see how independence could allow Scotland to spend more on the NHS than would be possible within a Union where it will have significant tax raising powers and considerable say over spending priorities.”

“Previous IFS work on the longer-term outlook for an independent Scotland’s finances suggests that under a wide range of scenarios, a combination of the eventual fall in oil revenues and an ageing population could make for a tougher fiscal outlook for Scotland than the rest of the UK and hence less room for additional spending on things like the NHS.”

It is no exaggeration to say that Salmond’s claims lie in abject ruin this afternoon.