1 December 2020

Don’t be taken in by Nicola Sturgeon’s regressive NHS bung


It will be obvious to most people elsewhere in the United Kingdom what Nicola Sturgeon’s announcement of a £500 bonus to NHS staff in Scotland was actually all about. It would be comforting but misguided to believe that her motives were genuine, that her priority is to reward hard-pressed health workers and recognise their outstanding service during the Covid crisis.

Alas, it is not. The First Minister’s priority remains what it has been since she joined the SNP as a teenager: independence. Specifically it’s about winning a mandate for a rerun referendum at the Scottish Parliament elections next May.

Many Scots will of course fall for this particularly obvious tactic, but that speaks only to voters’ gullibility, not to Sturgeon’s purity of motive.

You only have to look at the tweets of senior SNP politicians – all of whom clearly got the memo shortly after the First Minister’s speech and duly obeyed their instructions – to understand why the announcement of a cash-in-hand gift was made. Inevitably, it was Ian Blackford, the party’s Westminster leader, who was first to reject entirely the concept of subtlety with this tweet:

Well, that’s next week’s PMQs question sorted, at least.

The tactic is so obvious it should not require explanation. Announce a bonus then “demand” (the SNP do like to make demands) that the Treasury don’t tax it, all the while knowing that they will tax it anyway. Hey presto! Evil, selfish Tories depriving our heroic NHS of cash. Again! Honestly, no wonder Scots want independence, eh?

The frustrating thing is that it will probably work. Few will even bother to check the facts or consider the implication of a Scottish government that already has some form on thinking up eye-catching, headline-friendly ideas that appear, on the face of it, to be generous and fair but which, after even a cursory consideration, turn out to be yet more handouts to wealthy people. “Free” prescriptions were – and were always intended to be –  a financial boost to people who could already afford to pay for their medicine, and “free” university tuition, has proved a useful tool to allow middle class students to nab increasingly rare places over the heads of poorer students.

And now the NHS bonus. The Scottish Government could, of course, have decided to “gross up” their electoral bribe-… Sorry, I mean NHS bonus – so that workers would get a much larger share of the £500. Since anything deducted in tax would come back to Edinburgh in due course, there is no financial down side to this for the SNP: the headline cost would remain unchanged while the net sums received in pay packets would be similarly unaffected.

But the decision to waive tax still lies with the Treasury, which is why this course has been chosen: because SNP ministers know the Treasury will refuse to do so. Cue many headlines about the SNP “standing up for Scotland and the NHS”. Job done.

But as the Fraser of Allander Institute, a leading Scottish thinktank, has pointed out, governments are reluctant to waive tax on bonuses, because if a precedent is created, the temptation will be to avoid tax altogether by paying people using bonuses instead of wages, thereby reducing the overall tax take.

More importantly, a flat rate bonus paid across the board goes entirely against the principle of a progressive tax system. Why should people earning above – sometimes well above – the higher tax threshold receive precisely the same amount of bonus as an NHS cleaner? 

They shouldn’t, of course, and on this occasion it will be HM Treasury in London who will ensure that such unfairness cannot stand, while it will be the SNP in Edinburgh who will kick up a fuss in support of highly paid consultants getting the same as a trainee nurse. Just as importantly, the principle that by paying tax we all contribute to our public services – particularly the NHS itself – has been temporarily abandoned by the SNP which still likes to paint itself, somewhat optimistically, as left-wing. By insisting the bonus is taxed, and by making sure that higher earners pay more of it to the public coffers, the Conservative-run Treasury is actually out-lefting Nicola Sturgeon. How’s that for irony?

You can hardly blame the SNP for pursuing this tactic, though. Favouring the wealthier middle classes over Scotland’s less privileged communities has worked out extremely well for them in the past. Why should this time prove any different?

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Tom Harris is a former Labour MP and author of 'Ten Years in the Death of the Labour Party'.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.