Health spending in Scotland has fallen since devolution, claims new report

Spending on Scotland’s NHS has slowed dramatically since Holyrood took over the health service budget, according to a new report by the Institute of Fiscal Studies.

Research by the economic think-tank into differences in public spending in Scotland and England found that while health spending per head of population remains higher north of the border, it is now just 3 per cent more, compared to 22 per cent at the start of devolution.

The IFS states while health spending is a growing proportion of total public service spending in both countries, the increases in Scotland have been “significantly smaller” than those in England.

Overall, the research estimates that real-terms spending on health per person increased by 63 per cent in Scotland during the first decade of the Scottish Parliament, compared with 80 per cent in England, while in the 2010s it increased by 3 per cent, compared with 10 per cent in England.

The difference in health spending between Scotland and England has closed over the last 22 years.

Despite this “squeeze” on health spending, the reports authors say, there has been no relative decline in service performance in Scotland’s NHS, at least over the past decade.

However, the report is more critical on education spending, stating that despite more than £7,000 being spent per pupil aged from three to 19, compared with less than £6,000 in England, Scottish secondary pupils are not performing better than their peers south of the border in international assessments, particularly in maths and science.

Meanwhile, despite “substantially higher" spending on higher education to avoid students paying tuition fees in Scotland, the share of 18-year-olds going to university has grown more slowly than in England.

The IFS also reports “total identifiable spending” on public services and benefits per person in Scotland was 20 per cent higher than in England in 2019/20, while the gap in spending per person on benefits, which is largely based on UK-wide eligibility rules, is just 6 per cent.

The new research was seized on by the Scottish Conservatives as proof of the “union dividend”, but both they and the Scottish Liberal Democrats questioned whether the spending priorities of the Scottish Government were correct. The SNP, however, said the figures were proof the government had maintained health spending.

Ben Zaranko, research economist at the IFS and one of the report’s authors, said: “Per-person spending in Scotland is higher than in England for virtually all public services, but devolution allows the Scottish Government to make different choices from the UK Government over which services to prioritise.

“Over the past two decades, under both Labour and SNP-led administrations, the NHS has been prioritised to a lesser extent than in England.

"As a result, Scottish health spending per person is now just 3 per cent higher than in England, versus 22 per cent at the start of the devolution. Instead, Scottish governments have placed relatively more priority on other services.

“Since the SNP has led the government, this includes adult social care, early-years and higher education, and public order and safety.”

The report also highlighted a “convergence in official estimates” of health spending levels over the past five years, which the authors say make it “difficult to square with the figures reported in Scottish Government budgets”.

It adds: “These suggest increases in funding for its health portfolio that are much bigger than seen for health services in both its own and the UK Government’s official spending estimates.

"In part, this may reflect a growing share of the health portfolio’s budget going to early years and adult social care services, but this is unlikely to explain the entire discrepancy. Given the salience of health spending, the Scottish Government should look to reconcile and explain the differences in these two sets of figures.”

Christine Farquharson, an IFS senior research economist, said Scotland’s “substantial spend” on education in comparison to England had been growing over time.

"But on a range of indicators, it’s not always clear that this spending delivers better outcomes,” she said.

In addition to education, per-person spending on a range of other public services is much higher in Scotland than England, according to the IFS. This includes adult social care services where spending was 43 per cent higher than in England in 2019/20, compared with 30 per cent higher in 2009/10 and 27 per cent higher in 1999/2000.

Spending is also much higher per person than in England for public order and safety at 19 per cent.

The IFS found capital investment spending is also high in Scotland, averaging 30 per cent more per person than the UK average between 1999/2000 and 2019/20.

Scottish Conservative health spokesman Donald Cameron said the IFS report “proves yet again how Scotland significantly benefits from being part of a strong United Kingdom”.

He said: “But it also tells a few other home truths about the SNP's appalling record in power.

"While public spending in Scotland is significantly higher per head than elsewhere in the UK, the report finds that does not equate to better services or outcomes, as can be seen with education. Like nationalists the world over, Nicola Sturgeon's SNP seeks to blame others for their own shortcomings.”

Scottish Liberal Democrat leader Willie Rennie said the UK’s “pooling and sharing arrangements have ensured that Scotland benefits from a generous share of public spending”, but stressed the SNP had to ensure the government got “every bang from every buck of public sector spending”.

However, Emma Harper, SNP candidate for Galloway and West Dumfries, said the report showed Scotland had “consistently maintained higher per head health spending than England”.

She said: “The SNP Government has invested record levels of funding in real terms into NHS Scotland.

"On top of this we are offering NHS staff in Scotland a 4 per cent pay rise – more than the measly 1 per cent in England – and we have pledged to bring in a National Care Service if re-elected.

"The report also highlights that we've increased social care spending faster and taken forward integration.”

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