Westminster Mismanagement

Independence will protect Scotland’s NHS funding from Brexit dangers

So the NHS  is 70 years old. Or should I say NHS Scotland, NHS England and Wales and NHS Northern Ireland are 70 years old. From the outset the different NHS services have been run as separate entities, founded by different Acts of Parliament (Wales devolved since 1999) and with the onset of the devolution age the way those services are run and funded has diverged.

Although independent, they have until recently had near identical contracts for doctors across the UK. However Jeremy Hunt’s doctors contract reform has increased the working burden and decreased pay – so England will now have different contracts to the other services. Likewise, the Scottish Government’s 9% pay rise for NHS staff (not doctors or executives) over the next three years when compared to England’s 6.5% makes it more attractive for nurses, for example, to work in Scottish hospitals.

In all UK nations the NHS has become a revered institution, and rightly so. Although, it has also become a sacred cow political issue at elections, making it a real vote loser if a party wants to reduce NHS spending.

This explains why the Conservative party, which has many leading figures who would like to get rid of or privatise most of the NHS, is pledging to significantly increase the English NHS budget in the next few years.

Theresa May has pledged to increase NHS funding by £20 billion post Brexit. The money for this, she claims, will come from the savings on EU membership and possible tax rises. There will be no EU membership savings from Brexit, however, as Government revenues will either fall as the economy retracts with a hard Brexit or soft Brexit access to the single market and customs union will cost almost as much as membership did.

So there will have to be big tax rises to fund that £20bn, offered largely so the PM can maintain support from the fools that painted an uncosted promise/lie on the side of a big red bus.

The most likely target for tax rises will be fuel and spirit duty which will damage sales of whisky and gin (from Scotland) and disadvantage rural Scotland where fuel taxes increase delivery costs and longer journeys are often required.

Don’t think that the extra £20bn will mean better NHS services – standard inflation and the cost of Brexit to the NHS will eat up most of that increased spending.

For example, Brexit will cause significant staffing problems for the NHS across the UK albeit potentially slightly less so in Scotland. One in 20 of Scotland’s doctors comes from other parts of Europe, and the BMA fear that one-third of Scotland’s European doctors will leave because of Brexit. Some 4% of nurses and midwives in Scotland hail from Europe and registrations for the Nursing and Midwifery Council fell by 87% in 2017/18 whilst 29% left it altogether.

So the UK Government’s £20bn promise looks like a desperate attempt to stop the collapse of the NHS in England and the Scottish Government’s pay rise looks like a clever plan to steal more nurses from the UK.

So will that £20bn promised to the English NHS help Scotland? The way the Scottish block grant works is that the UK Chancellor sets a budget to run England and the Barnett formula takes a population percentage share and adds a small increase which it supplies to the Scottish Government to spend as it sees fit.

Two important points here are that: 1) This flexibility to set its own budgets has allowed the current Scottish Government to spend £10,651 per head of population on the NHS in 2016/17 whilst England spent just £8898. 2) The Barnett formula is not a bonus as there are dozens of ways in which the UK removes money from the Scottish budget that far outweigh any Barnett benefit.

If privatisation in England reduced costs (otherwise why do it), then the English health budget would reduce and so would the funds allocated to Scottish health. The Scottish Government has the ability to maintain its NHS spending – it just has to cut elsewhere or raise the taxes it has control over.

It’s worth noting though that OECD data reveals that government-provided healthcare systems cost the state less than private ones, and generate higher patient satisfaction and more available hospital beds.

Tory privatisation isn’t about saving money, it’s about helping big business make profits from taxpayers’ money.

It’s worth pointing out (as I have done before) that any US trade deal will require NHS access for US health companies. That threatens the independence of the Scottish NHS, as currently the Scottish Parliament could block such a deal – another power to be ripped from Scotland?

Finally let’s deal with one of the most ridiculous 2014 scare stories – that after independence patients needing to travel to the rUK for treatment would not get those treatments for free.

As the two NHS services are already independent of one another, there is an existing system in place. When a patient from Scotland is transferred to England for specialist care, the English NHS providers invoice NHS Scotland for providing that service. It isn’t free now.

With a significantly larger population and a more acute shortage of beds, the English NHS appears to be sending more patients to Scotland than Scotland is to the rest of the UK.

NHS England won’t tell me how many patients they send to Scotland and infuriatingly the Scottish Government don’t require Scottish NHS boards to keep track.

However, I do know of a specific case where NHS England is sending seriously ill anorexia patients hundreds of miles to Scottish care units due to care bed shortages in England. One English NHS patient transferred to Glasgow’s (private) Priory Hospital, claimed that “the number of English people there massively outnumbered Scots”. I will keep digging.

So the single largest threat to funding and staffing of Scotland’s NHS at 70 is Brexit-caused staff shortages and the threat of Brexit-led privatisation. Indeed, NHS Scotland’s independence is currently protecting the service, its patient and staff.

Clearly in an independent Scotland health services provided free at the point of need would be a higher priority for any Scottish Government than it is now, or can ever be in a post-Brexit UK.


About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland Gordon ran a business strategy and social media, sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and Believe in Scotland.

1 Comment

  • Please bear with me – this is not a soundbite answer, it is a 5 minute read, but it has a point about economics that must be understood. The standard neoliberal narrative is that taxpayer’s money pays for the NHS. That’s not how it works. The NHS is perfectly affordable, and can be improved, without all the pain and anguish. An independent Scotland with its own sovereign currency could afford a world class health service. Please read on:

    After 1971, the pound was no longer pegged to the dollar and we entered the current era of free-floating currencies, where the value of the pound is decided on the international markets. Sterling became a fiat currency, one that is not backed by a commodity or tied to a foreign currency. The policy limitations that resulted from the gold standard and fixed exchange rates no longer applied. Moreover, the claim that the government was revenue constrained – that taxes pay for spending – no longer made any sense.From the government’s perspective, the age of money scarcity was over and it’s been like that ever since.

    Unfortunately, the illusion of revenue constraint is still with us today and that’s because gold standard thinking suits the agenda of the rich and powerful.

    Here are three questions, the first two of which are very simple. Here’s the first question:
    • Do you believe that the government deficit should be cleared within the next twenty years?
    I don’t think the answer is in doubt – most people are going to answer ‘yes’.
    The second question is:
    • Do you believe that everyone should have the opportunity to save a small amount from their income?
    Saving is usually seen as a good thing, so, ‘yes’, am I right?

    The third question is a bit more complicated. Most people think of government spending in a way that supports a fundamentally neoliberal agenda. Specifically:
    • they think that tax is a burden placed on the private sector to enable the government to get its spending money;
    • they think that money is taxed only once, reinforcing the burden concept and leading them to focus entirely on the tax that they alone pay;
    • they have no regard for what happens when they spend their income or where it came from in the first place;
    • they don’t realise that all government sector spending initiates a spending chain in the non-government sector;
    • they don’t realise that at each link in that chain some tax is likely to be paid – income tax, national insurance, corporation tax, VAT, stamp duty, import tariffs;
    • and they can’t see that this means that government will always get back almost all that it spends.

    To see how this works, let’s look at one of the payments and analyse the spending chain it creates. Suppose the government pays someone £100 for some work. I am assuming a simple tax system where all transactions are taxed at 20%. Right, here we go:
    • The government pays £100 to a window cleaner;
    • She pays 20% income tax on the £100, so £20 goes straight back to the government;
    • She spends remaining £80 at Aldi for a week’s worth of food and essentials for herself and her daughter;
    • Aldi pays 20% VAT on the purchase – I know that’s not how VAT works, but bear with me – and £16 goes back to the government;
    • Aldi uses the remaining £64 to pay someone to run its tills for a day;
    • He pays 20% income tax and government gets £13 back;
    • He is left with £51, which he uses to buy a train ticket to go and see his mum;
    • Virgin Trains pays 20% VAT on the ticket price and another £10 goes back to government;
    • Virgin uses the remaining £41 to pay for a window cleaner to clean the windows at one of its stations, and so it goes on.

    It is just a simple arithmetic progression where government spending causes taxation – not the other way around. This is really what it is all about – the spending comes first and that makes the tax happen. I’ll say that bit again. The spending comes first. That makes the tax happen.

    But we’ve only followed the spending chain for a few links. The process will continue until the government gets back £90 and income amounting to £450 has been generated.

    Therefore, the difference between the amount the government sector spends and the amount it gets back in tax is equal pound-for-pound, penny-for-penny to the total savings of the non-government (private) sector.

    Hang on a minute! Isn’t the difference between what the government spends and what it receives in tax the definition of the deficit? Of course it is. The thing we call the ‘deficit’ (which is universally perceived as a Bad Thing) is nothing other than an accounting representation of aggregate savings (which are universally perceived as a Good Thing).

    It’s not accidental that the public suffer from deficit doublethink. Imagine you were a neoliberal strategist, hell-bent on reducing the size and reach of the state. Which term would you use to describe the difference between government spending and tax receipts? Deficit or savings? Terrifying black hole or national nest egg?

    Net financial assets – that’s just a fancy name that economists use for ‘savings’ – cannot come from anywhere other than from government spending. That’s because the real money in the system always comes from government. So question three: Is the government deficit a good or a bad thing? That question might appear rhetorical by now.

    I hope the point has been made that without government deficit there is no private sector savings. That £10 saved out of the initial £100 spend appears as a liability (debt) in the government’s balance sheet. The notes and coins in your pockets, the money in your bank account, your pension fund is all part of the ‘national debt’.

    To sum up, government does not need taxes to spend. The government must first spend to create money in the economy that enables people to pay taxes and save.

    Ultimately, if I now say taxes do not fund government spending perhaps that makes sense, and I hope it is obvious that government spending is what creates money. There is no real problem with this. The government of the UK is not fiscally constrained like a household. The government is the creator of the £££ we use in the economy and it is their duty to provide the infrastructure and services – health, education, transport, welfare etc..

    The UK government can never run out of ££, it can never default on its sovereign (£) national debt, and it can never, ever, go broke.

    So, armed with this knowledge about how the economy really works, perhaps you can see how we are being deceived, and as long as we believe these neoliberal lies, as long as the phrase ‘taxpayers’ money’ is believed, nothing will change.

    To find out more, visit: https://www.facebook.com/groups/1466864300089196/?ref=group_header

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