VAT and fuel rises hammer health service

THE loss of more than £70 million to Scotland's NHS this year through UK tax hikes and soaring fuel prices has sparked fears of "obscene" cuts to services, such as hospital closures and job losses for frontline medical staff.

Scotland's health boards have been saddled with 71m of extra costs during 2011-12 because of the UK government's decision to impose VAT and National Insurance (NI) hikes, alongside rising electricity and gas bills.

The increased funding pressures on the NHS were revealed after it emerged that Scotland's largest health board, NHS Greater Glasgow and Clyde, was cutting back on operations such as the removal of tonsils, varicose veins and "minor" lumps to deal with a 55m deficit to its budget.

However, The Scotsman has learned that the Glasgow health board has been hit with 16m of extra costs, due to a 6m VAT hike, a 3.5m NI increase and a 6.5m rise in energy costs during 2011-12.

The figures represent nearly a third of the 54m efficiency savings Glasgow's health authority is expected to make during the next year.

A senior SNP MSP is now warning of "a loss of services because of UK taxes". Glasgow MSP Bob Doris said: "The SNP warned when the UK Labour and then Tory government put up VAT and National Insurance that public services would be hard hit.

"We called on the UK government to take action then and I would urge them to look again at their decision to increase taxes on public services to pay for government debts.

"Glasgow find themselves in a difficult position. While the SNP government has increased NHS funding, the UK government has simply taken it away. However, no one should suffer a loss of services because of UK taxes."

Further figures obtained by The Scotsman showed that the increased costs to health boards across Scotland was 25m to cover increased VAT, 16m for NI and 30m for fuel. The figure of 71m is nearly a quarter of the 300m of efficiency savings Scotland's health boards are being forced to make during 2011-12.

Margaret Watt, chairwoman of the Scotland Patients Association, described the VAT and NI increases as a "tax on the sick".She said: "We are talking about lots and lots of money being lost to the NHS here and it's an obscene amount.

"It could lead to hospitals closing and staff in the NHS losing their jobs. It's unacceptable and I would hope that the UK government does something to bring these costs down, which are a tax on the sick."

Meanwhile, NHS Greater Glasgow and Clyde said that pressures such as VAT rises and energy costs were forcing it to re-examine service provision.And the health board defended its proposals to cut back on certain operations, saying: "Reducing low health gain procedures such as tonsillectomies, grommets, varicose veins, dilation and curettage and minor lumps surgery are included in these efficiency proposals."

The health board will reach a final decision on the proposals on 28 June.

Painful hikes

THE UK government raised VAT from 17.5 per cent to 20 per cent as of January this year. The threshold at which employers start to pay National Insurance was raised by 21 per week above indexation in April.

There were price rises of 2 per cent for gas and 8.9 per cent for electricity in November 2010. Scottish Power last week announced it is raising gas prices by 19 per cent and electricity prices by 10 per cent.

Some 300 million of savings have to be made by Scottish health boards.