NOT paying the fee to be part of the European market would finance the shortfall in health funding, writes Brian Monteith.
There was a point during the referendum campaign when, out of nowhere, the importance of the NHS suddenly began to dominate the headlines. The SNP, and many who should have known better, made outrageous claims that if we voted No, the NHS would be privatised in England and the financial impact of that change would cut Scotland’s block grant (mistakenly called the Barnett Formula) so much that a Scottish government would have to privatise the NHS too.
The intentional deceit and fear-mongering around this fabrication was neither consistent nor logical. As I pointed out at the time, a significant proportion of the NHS is already delivered by private providers – commonly known to us as GPs, dentists and other specialists. The spending on them is not considered privatised now, nor would such spending on more contracted provision be considered so in future.
The use of independent services to provide a more flexible and efficient NHS has been developing for years. Some 83 per cent of NHS England’s outsourced services were already in place when the current coalition government came to power. The trend is to encourage such development as it provides a more dynamic service able to respond more quickly to changing patient demand. But if we follow the SNP’s logic about being forced to go down a cheaper, independent route, there is an inherent admission that the Scottish NHS must be paying over the odds for public-sector monopoly at the moment.
As if to highlight this attempt to scare people into voting Yes, there was published last week a significant report about improving the NHS in England, the likes of which would be a starting point for upgrading services in Scotland – had our government not been so distracted for the past two years by its policy cul-de-sac of an independence referendum. The report, NHS Forward View, from Simon Stevens, head of the NHS in England, appealed for extra funding of £8 billion by 2020. The report pointed to the current £100bn cost of the NHS in England (2014-15) and said that, despite a planned increase in funding at least in line with inflation, it faces a projected £30bn shortfall by 2020. Increased costs of healthcare and significant demographic challenges from a population where more people are living longer and the proportion of pensioners is increasing will drive NHS costs up.
Simon Stevens is expecting that improved and more flexible methods of delivering services – often using independent providers such as GPs offering hospital services – can fund £22bn of the shortfall, but that still leaves an £8bn gap. Were this £8bn to be found by the Westminster government, the expected Barnett consequentials could mean about £800 million coming north to go to Scotland’s NHS. Hardly a whopping cut, then. If Scotland raises its own taxes, it will have to find that £800m itself.
No political party has yet committed to finding such a large figure this side of the general election and it remains to be seen if it would be a credible promise even if one did. How, with so many other pressures on the economy, such as the continuing deficit feeding our growing national debt, can £8bn in tax revenues be found?
Well, here’s another thought that last week’s events should prompt us to consider – and which was also the subject of much misinformation and a willingness to avoid any genuine debate whatsoever.
The European Union is demanding a further £1.7bn from the UK Treasury for the privilege of us remaining an EU member. The bill caused outrage from the Prime Minister, although reports that he was refusing to sanction it being paid were later amended to say he would not pay it by the deadline of 1 December. Some critics accused him of mock outrage to appear more Eurosceptic before the Rochester and Stroud by-election. Whatever the truth of his anger, it is beyond belief that the £1.7bn will not be paid – making it even harder to find that extra £8bn that the NHS in England is expected to need.
But wait, the latest Treasury estimate for the annual cost of the UK’s membership of the EU is £15.74bn a year (excluding the new bill of £1.7bn), but it receives £3.11bn from the rebate Margaret Thatcher negotiated and a further £4.17bn in grants and subsidies – meaning we get £7.28bn back.
This leaves the net cost of EU membership at currently £8.52bn per year. It should be noted that in the past decade, the net cost to the UK of being an EU member has risen by 200 per cent, while the UK economy has grown only 14 per cent. The trend is for the net cost of EU membership to grow and grow – as the additional £1.7bn shows.
While the fury surrounding the £1.7bn bill focuses on how we cannot escape the EU accessing our nation’s vaults and the fact that France and Germany will get a rebate, while the UK and Greece (!) face a further bill, and how the calculations take into account estimated black-market economic activity, the episode offers a ready-made solution to saving the NHS.
If the UK were to leave the EU before 2020 (possibly as early as 2018) it would not have to pay the annual £15.74bn membership subscription. Even if it still had to spend the same that the EU issues in rebates, grants and subsidies (and the UK would be free to change these) that would leave it some £8.52bn better off – and therefore able to meet the £8bn cost of the NHS shortfall.
The answer to those wishing to “save the NHS” – be it in Scotland or England – is staring everyone in the face: leave the European Union and our government will have the funds to meet that £8bn NHS bill. As my associate Ian Milne, the chairman of business think tank Global Britain, has repeatedly pointed out, the UK’s economic future lies in trading with the rest of the world where economies are growing instead of relying on trading with a declining European customs union – at great expense.
Rarely does political economy offer such a simple solution, nor is it so easy to procure – but put together that £8bn does show the scale of the EU membership fee and the challenge we face of funding the NHS.