Nicola Sturgeon rubbishes IFS claims about SNP spending pledge

Earlier this week, the Institute for Fiscal Studies (IFS) said the First Minister’s spending, outlined in the SNP's manifesto, may not be enough to cover increased demand on the health service.

The SNP will increase frontline NHS spending by 20%, worth £2.5 billion, over the next five years if they are re-elected on May 6, along with an £800 million boost in social care funding.

The IFS said this was equivalent to a real-terms increase of about 2.1% per year above inflation, which is less than the 3.4% per year promised to NHS England in its most recent long-term funding plan. The group also questioned Sturgeon’s comment that no tax rises would be required to fund the multi-billion pound commitment.

READ MORE: SNP to freeze income tax and rejuvenate NHS if re-elected, Nicola Sturgeon says

Sophy Ridge from Sky News asked Sturgeon if the SNP are serious about funding the NHS, saying: "Is the rhetoric better than the reality here?" 

The First Minister responded: "At the last Scottish election, I made a commitment that we would increase funding in the National Health Service by £500 million in real terms.

"In reality, we've done three times that – the NHS budget over the past five years has increased by £1.8bn in real terms."

Ridge interrupted to say: "You don't have to do what you're promising now, you're promising a transformational, increase in NHS funding. IFS say this works out as an annual rise of 2.1% above inflation. In England it's 3.4%."

The FM responded: "I can come on to that point but I actually think it is legitimate to say to people, look, you have pitched these questions at look at my record so I'm pointing to the record where we actually exceeded the commitment we made."

She said the recurring costs of the manifesto commitments would be £6.1bn in the final year of the next parliament. She said this would be affordable without tax increases or spending cuts because, based on the central funding scenario of the Scottish Government’s medium term financial strategy, the resource budget will be £6.5bn in 2026-27.

"There's two points to make here: the IFS have looked at the position in England up to 2023 – that's the only the timeframe in which the UK Government have made a commitment in England," Sturgeon went on. 

"The commitment I've made for the next parliament takes us up to 2026 so it's apples and pears to make the comparison that you have made.

"But the other point – and this is a key point – is that in a sense the commitment I have made is a backstop, whatever the budgetary position that the UK Government delivers for Scotland, we will deliver that transformational 20% increase in health funding.

"But if the UK Government exceeds that, and there is extra money coming through the Barnett formula, we will commit that to the NHS as well."

She continued: "By definition, we cannot be spending less than the UK Government does in England because of the commitment we've made is the backstop and if the Barnett formula allows us to go further, we will go further.

"We exceeded our commitment of the last election, and we will deliver this commitment, at least over the next parliament, a 20% increase in NHS funding which amounts to £2.5bn, extra money for social care over and above that which the IFS analysis also doesn't take into account.

"Also shifting the balance of investment, so much more is going into community health care and mental health care too."

David Phillips, an associate director at the IFS, said on Friday: “Paying for all of these pledges in what could be a tight funding environment over the next few years will require tricky trade-offs, though: tax rises or spending cuts in at least some other areas.

"The tougher fiscal situation an independent Scotland would face in at least its first few years would make the challenge of delivering these commitments even harder.”

The SNP has also pledged to scrap NHS dentistry charges at an initial cost of £75m a year and then rising to £100m annually as demand grows, and government-supported childcare will be expanded to one and two-year-olds.

The rates of income tax will also be frozen over the next parliamentary term if Sturgeon is re-elected to continue serving as First Minister.

Last week, an IFS report found  tax and benefits system is the most progressive in the UK.

The think tank said changes to income tax rates mean those earning £50,000 will pay around £1500 more in income tax this year than if they lived elsewhere in the UK.

READ MORE: Scotland has most progressive tax and benefits system in UK, analysis shows

Tax cuts for those on lower incomes are smaller and amount to at most £21 per year, the IFS said.

But the think tank added the Scottish Government's five-band system for achieving this was unnecessarily complex and a similar effect could be achieved by introducing a new 0% band for those on lower incomes.

A briefing note published by the IFS also examined the case for further tax devolution.

It found this would reduce the scope for tax evasion but would create many losers as well as winners, saying the Government has shied away from radical changes in property tax where powers are already devolved.

Stuart Adam, a senior research economist at the IFS and an author of the report, commented: "The Scottish Government's tax and benefit policies follow a strikingly consistent pattern: both over time and relative to the rest of the UK, they involve giveaways at the bottom and tax rises at the top.

"Changes to income tax, social security benefits, council tax, business rates, and land and buildings transaction tax have all contributed to that pattern.

"Changes to the way benefits are paid should make life easier for claimants. In contrast, the tax changes have tended to complicate the system.

"The additional complexity in income tax is particularly unnecessary: a very similar pattern of tax payments could have been achieved without the need for separate 19%, 20% and 21% rates."