The NHS and the Oil Fund

Marlyn Glen

8 April 2012

The latest chapter in the SNP’s election guarantee “ to protect the health service for the duration of this Parliament “ has seen NHS Tayside being compelled by the Scottish Government to find savings over £24 million – 4 per cent of its budget – this year.

The health board plans to make savings of £8million from “workforce efficiency” ,.

Such efficiencies have already produced the loss of over 2,000 nursing posts across the NHS in Scotland, and a RCN survey published this month cites their effect on the health service at ward level :

 “ recruitment freezes…leading to vacancies left unfilled…

 “Staffing levels …being managed by skill mix changes …

 “The redistribution or redeployment of staff “.

Almost half of their members  responding to the survey  reported  that”  their additional hours are usually not paid, thus revealing the huge reliance on nursing staff working unpaid overtime”. 

“These findings reveal the heavy reliance on the goodwill and hard work of nursing staff in both the NHS and the voluntary/charity sector. If nursing staff stopped working unpaid overtime, then their work would have to be undertaken by bank staff  which would costs millions of pounds more a week.”

In Scotland, almost 40 per cent said they worked an extra 2 hours a week on average , almost 30 percent said they worked between 2 and 4 hours a week extra., with 10 per cent working over 8 hours a week extra.

The health service faces, the survey said,  “ rising demand for services, plus steeply rising drugs bills and other service provision costs, meaning an even bigger effective funding shortfall.”

The NHS is funded from the taxation , and so funding shortfalls would be a certain consequence for the NHS and other public services from the SNP’s plans to lower corporation tax on business in an independent Scotland.

And so would the operation of the SNP’s proposed Oil Fund .

The Oil Fund has seen a few summers, having featured in their manifestos as far back as 2001

Alex Salmond has loftily proclaimed that a Scottish Oil Fund, similar to Norwegian Government’s Oil Fund , could accrue over £1bn a year of oil and gas tax revenues that could be lead to a £30bn fund over 20 years for investment in the future.

The workings of Mr. Salmond’s vanguard economic driver , however, have already run on to the rocks of academic and Parliamentary scrutiny.

Saving for the future means less being spent on public services such as the NHS in the present.  

The Glasgow University-based Centre for Public Policy has said that setting up the fund “would mean some very difficult decisions would need to be taken, in the absence of oil prices and production far exceeding current expectations.

"At existing oil prices and production levels, all North Sea taxes are, and will continue to be needed, to help fund the deficit that emerges from maintaining existing levels of public services….

“There is little prospect of any surplus becoming available for an oil fund, and certainly not of the size being suggested."

When questioned by the Energy and Climate Chance Select Committee at Westminster earlier this month, SNP Energy Minister Fergus Ewing was asked, “ If you were putting £1 billion aside into an oil fund with that money accumulating at, say, 2% to 4% per annum, yes, for the future, the money would have to come from elsewhere. Public services would have to be cut. Do you see it that way?

Mr. Ewing retreated to a response of “ Public services have to be prudently managed in government and that is what we do and that is what we should continue to do.”

He was then challenged on Mr. Salmond’s claim that the Oil Fund would acquire £30 billion over 20 years .

Based on the Norwegian model that Mr. Salmond used, this would mean that the Scottish oil fund would enjoy rates of return on its investment that were much higher than the Norwegian oil fund did.

Mr Ewing replied , “It is not possible for me to state with accuracy what the future rates of return of this type are going to be.”

Asked “ If there was independent Scotland, at the first opportunity would you be setting aside £1 billion per annum?”, Mr. Ewing responded, “ I think we really need to answer the question in a different way.”

Mr. Salmond says that the Oil Fund will be established “ when fiscal circumstances allow”, but no doubt it will re-emerge in the news cycles of the Referendum campaign.

Coincidentally, the oil fund provided the ocassion for one of Mr. Salmond’s  grander claims - Scots would live longer under independence.

It was in 2006, on a visit to Oslo to discuss the Norwegian Oil Fund that Mr. Salmond said ,

"It is my ambition and aim that within a decade of independence, by building a fairer, wealthier and healthier Scotland, we will match Norwegian life expectancy."

Norwegians have a life expectancy some three years longer than Scots.

Mr. Salmond has yet to reveal details of how the gap between Norwegian and Scottish life expectancy would be closed, and particularly why a constitutional change is necessary to prolong life.

The Scottish Public Health Observatory records that “ Scotland has one of the lowest life expectancies in Western Europe. “

As with the health service, and as with the Oil Fund, the rhetoric does not match the reality.




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