Monday, September 15, 2014

Financial impact of independence on the NHS

The impact of independence on NHS Scotland has caused some of the most impassioned debate in the whole campaign - despite it being a devolved issue. Objective analysis is hard to come by, but at least we now have some numbers, helpfully crunched by the respected Institute for Fiscal Studies.

Nicola Sturgeon has said that a 'Yes' to independence would free the Scottish NHS from an agenda of privatisation and public spending cuts. The 'No' campaign focuses on what iScotland’s finances would mean for NHS funding. Gordon Brown has said he wants to 'Nail the NHS lie' of the 'Yes' campaign.

The historical point IFS makes is that Scotland has not given the same priority the health spending as the UK, as this table illustrates.


For the future they point to the likelihood of downward Barnett consequentials of UK spending cuts that will make it harder to protect NHS spending. Unless, the Scottish Government is willing to use their existing and new taxation powers - something they appear reluctant to do.

Independence would give greater freedom to spend more, depending on the constraints of a currency union, should one be agreed. The capacity to do this depends on a range of assumptions over oil prices etc that are difficult to quantify. IFS has already set out their view on this, although it is challenged by Yes supporters, such as the Cuthbert's.

IFS conclude that, "in the short term, then, 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."

They also say the longer-term outlook is more difficult for them to quantify, "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." They concede this could be offset by faster economic growth in iScotland, but that is not certain, by any means.



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