PINSTRIPE

Two dramas are currently being played out which appear unconnected but in fact are inextricably linked and contain important lessons. The first is the howls of protest over the rates revaluation and the second is the usual winter crisis at the NHS.

The purpose of a rates revaluation is not to raise more money - the rate poundage sets the revenue - but to rebalance rateable values away from areas and businesses which have fared less well since the last valuation towards those which have had a relatively good time. Hotels and restaurants in Edinburgh up, offices in Paisley down. The winners remain silent and heave a sigh of relief, the losers forget the good run they have had and squeal like mad. Fairness demands that we do proceed with the rates revaluation not that we abandon it. The point to note, however, is that there has been lots of tears and threats - and no new real money raised overall.

The NHS appears to be always in crisis. More money is provided each year but more people wait ever longer to even get onto waiting lists (so the Government can claim the time on the official waiting list is on target), trolleys wait in corridors and people with minor ailments wait too long in A&E - possibly because they can’t get to see their GP for a week. The twin issues are an ageing population - actually a good thing - and new but unfortunately costly drugs and treatments. To continue to provide effective service to each citizen the amount of money the NHS needs must rise by considerably more than inflation each year - but it doesn’t. Scotland is actually doing a bit better than England in keeping the NHS running and is also genuinely trying to integrate the social and healthcare systems - the Scottish Government deserves credit for that.

The difficulty is that we are in the early stages of a demographic time bomb which will gather pace as the 2020’s progress. The proportion of older people in the population will rise swiftly. Unless we are prepared to accept an NHS which gives far worse service than it does today it is going to cost much more money at a time when the overall public finances (even assuming we avoid the economic idiocy of independence) will still be in bad shape.

The choice we appear to have is between having the service we want and the taxes we don’t. In fact there is another way and the Scottish Government has the power to take it - but it requires courage and leadership.

The answer is efficiency. Before you nod your head let me tell you what efficiency means. What it means is that if nurses and teachers aren’t any good they are removed. The final salary pension schemes in the public sector should be replaced by defined contribution schemes - it is a disgrace that employees in the private sector who have given up their final salary pensions continue to subsidise those in the public sector who have not. We need to involve the private sector more rather than less in our schools and health service. We need to ask ourselves when adding yet another layer of safety standards - Do we really need this? When we consider extra “rights” for workers we need to ask ourselves whether that is fair on the companies and wider society who have to pay for them. Unless we are prepared to do things like this we are going to have to swallow some serious tax rises or accept that our public services get worse. The Scottish Government does not need more powers to grasp this agenda, it could do it right now.

Pinstripe is a senior member of Scotland's financial services community