FRONTLINE services would face unsustainable pressure from a planned £30 million hike in the NHS rates bill, health chiefs warned ministers.

But the Scottish Government decided to press ahead with the controversial rates rise - which comes into force in April - despite claims from NHS bosses that the move would "significantly pressurise cash resources required" for hospitals, doctors and health centres.

Responding to a consultation over the plans, the heads of all 22 health boards said in a memo that NHS Scotland would face an increased bill in excess of £20m a year "at a conservative estimate", but "potentially in excess of £30m per annum".

Loading article content

The consultation closed in October, the same month that an annual report on NHS performance by Audit Scotland warned that the health service would have to make unprecedented savings in 2016/17 and "may not be able to balance their books".

Business rates apply to all NHS premises including hospitals, dentists, clinics and GP practices.

It is the first time in almost a decade that business rates for NHS buildings have been altered and the new costs are calculated to account for the rise in property prices since 2008.

The memo warned that NHS Scotland would also be disproportionately affected by the decision to apply a higher de-capitalisation rate on NHS properties compared to the rest of the UK.

The rate, based on a premises capital value, is 10 per cent above England's and 30 per cent higher than the rate for Wales.

The memo added: "Whilst many NHS Trusts in England and Wales may actually see a reduction in rates liability boards across Scotland, will face significant upwards pressure as a significant proportion of our estate is affected by the de-capitalisation rate adopted.

"Without a system of transition, health boards in Scotland face a significant rise in business rates costs, at a conservative estimate exceeding £20m per annum but potentially in excess of £30m per annum.

"These increases will significantly pressurise cash resources required for front line services."

It comes as hundreds of businesses are understood to be on the brink of closure after being hit with massive hikes in rates when their rateable values soared in the 2017 revaluation. In what has been billed as the licensed trade’s “poll tax moment”, pubs and hotels have in some cases seen costs for council services rise by four hundred per cent, adding thousands of pounds to their annual outgoings.

Scottish Labour economy spokeswoman Jackie Baillie said: "The SNP's NHS business rates bombshell could put front line services at even greater risk than they are already.

"We have heard from a number of businesses which will be hit by the SNP's business rates review, but this evidence from NHS boards themselves is chilling.

“This shows how the impact of the SNP's business rates review extends far beyond the private sector to the public services that we all rely on.

"The SNP's £170million cuts to local government will already put pressure on valued services like care for the elderly, without adding to this burden with business rates.

"The SNP was warned last year by the people who run our health service that this could cost millions, yet Nationalist ministers appear to have simply ignored this expert advice. It's time for the SNP to get a grip of this problem and come up with a solution that doesn't penalise the public services we all rely on."

Figures published last week estimated that hospitals alone will face an estimated hike in their business rates of more than £4 million to £41.4m next year, with the country's busiest hospitals bearing the brunt of the extra cost.

The flagship new Queen Elizabeth University Hospital in Glasgow is facing the single biggest increase in its business rates bill of 45 per cent, from £7.65m this year to £11.1m in the new financial year.

Scottish Conservative Glasgow MSP Annie Wells said: “The SNP can’t possibly expect these hospitals to provide the best service for patients while being hit with these extra charges.

“Finances are tight within the NHS, and there simply isn’t enough money to be coughing up more cash for Scottish Government coffers.”

However, while the overall bill is increasing, the majority of Scotland's hospitals - 21 out of 30 - will actually see their costs fall. Edinburgh Royal Infirmary's bill will reduce the most, by nearly £140,000 per year.

A spokesman for the Scottish Government said local authorities retain all the business rates revenue they collect.

He added: "It is for councils to apply rates reductions, on top of existing statutory reliefs, as they see fit. Individual business rate payers, including NHS Boards, can appeal their valuation via independent processes if they feel it is incorrect.

"The NHS has worked closely with Scottish Assessors Association (SAA) to understand the impact of the Rating Revaluation 2017 and this has been factored into the financial plans of all NHS Boards.

"NHS funding is at record high levels and the health resource budget will increase by almost £2 billion by the end of this Parliament, from that increase NHS Boards will manage the impact of these changes."