The claim
“We will not cut spending on the NHS – we will increase it.”
David Cameron, 7 June 2011
Cathy Newman checks it out
When David Cameron launched his election posters just over a year ago – promising to “cut the deficit, not the NHS” – he looked young and fresh-faced, largely thanks to a bizarre decision by party HQ to airbrush out his wrinkles and bags, and put a twinkle in his eyes.
Today, he made the same pledge, but the trials and travails of high office have taken their toll. The Prime Minister is struggling to persuade the public that his commitment to the NHS has not been tarnished by the realities of being in government and having to balance the books. Is he right, or is he trying to airbrush out the facts?
The background
The simmering row over the future of the NHS is coming to the boil, with the Prime Minister giving it a stir of his own today. In a speech to NHS staff in London, David Cameron made five key promises. The Government would not endanger the principle of universal coverage, he said. Nor would ministers hinder “efficient and integrated care”, lose control of waiting times, sell off the NHS or cut its budget.
The Prime Minister added: “These are my five guarantees. Guarantees you can hold me to and that I will be personally accountable for.”
A worthy sentiment, although you could argue that the wording of most of those promises is so vague that it will be difficult to pin down Mr Cameron later.
But his promise on spending was fairly black-and-white, reflecting repeated assertions from the Coalition that the health service would be spared the cuts axe.
In the Coalition Agreement, the Government went further, saying: “We will guarantee that health spending increases in real terms in each year of the Parliament”, the all-important words “real terms” meaning that ministers are including the effects of rising inflation in their calculations.
The analysis
Shortly after the spending review last year, George Osborne said the NHS would see its budget rise by 0.1 per cent a year.
That’s obviously a lot less than the average spent under Tony Blair and Gordon Brown, but it’s the bare minimum the Government needed to spend to avoid being accused of breaking its manifesto pledge.
As FactCheck pointed out at the time, the precarious state of inflation meant that NHS spending was in danger of dipping into the red at any time if inflation rose.
Last month one expert – Professor John Appleby, chief economist at the leading health think-tank The King’s Fund – looked at the figures again and decided that spending was already heading for a fall.
After looking at worse-than-expected figures for the GDP deflator – the Treasury’s preferred measure of inflation – and adjusting NHS spending accordingly, he concluded that England’s NHS budget would be around 0.9 per cent lower in real terms in 2014/15.
The Department of Health immediately rejected his figures, and Professor Appleby was intrigued to discover the reason why.
The spending levels hadn’t changed, and there was no dispute about the level of inflation, but the one thing that could be altered to make the figures read better for the Government had changed.
When the spending review took place, the estimated NHS budget for 2010/11 – the baseline from which future rises would be calculated – was £103.8 billion.
When this year’s budget was published, that number had fallen to £102.9 billion, a small but significant change that spells the difference between a real-terms cut or rise in spending, according to Professor Appleby. The cash injection stays the same, but it’s now a slightly bigger percentage of a smaller amount.
He said: “The smallest change there makes the spend there look bigger. It overcomes the problem of the change in inflation.”
The Institute for Fiscal Studies (IFS) also drew attention to the issue in their report on this year’s Budget, saying: “In terms of the Government’s pledge to grow NHS spending in real terms year on year, this is now expected to be only barely met between 2010-11 and 2011-12.
“And then only because of a possible under-spend and the fact that they are comparing to actual spending in 2010-11, rather than a figure which takes account of temporary measures. At the time of the Spending Review the government used this figure including temporary measures as the comparator for all departments. If 2010-11 spending had been in line with the spending review baseline, then there would have been a small real cut in 2011-12.”
Whether all this is deliberate sleight-of-hand or just a stroke of luck for a Government increasingly under pressure on the NHS is difficult to say.
On the one hand, the Treasury hasn’t sought to hide the change in baseline. A note on the relevant page of the Budget says: “Estimated out-turns are not necessarily comparable with Spending Review baselines, as baselines exclude one-off and time-limited expenditure and other changes.”
We should point out that other departments’ budget baselines have changed too, and many of them have been revised upwards, which has the effect of making cuts seem greater.
On the other hand, voters may feel that when the Government talks about the NHS budget, spending and cuts – and when it makes a promise about those things – it ought to stick with the same baseline.
While the IFS stops short of accusing the Government of bad book-keeping, Professor Appleby told FactCheck: “I think that’s the wrong thing to do. They should stick to what they published in the spending review.”
FactCheck put it to the Department of Health that the Government might be cooking the books. They issued a straight denial, which contradicted Professor Appleby’s analysis without offering an alternative explanation.
A spokesman said: “We haven’t changed the baseline. As with all other departments the NHS spending number for 2010-11 in the Budget is the department’s own estimated out-turn given that we were near the end of the financial year.”
Cathy Newman’s verdict
David Cameron famously declared that while Tony Blair summed up his driving political passion in three words (“education, education education”), he could do it in three letters: “N H S”.
Before the election, he had some success persuading voters the Conservatives could be trusted to look after the health service. Now, that work is being undermined by his funding re-organisation, which will see control of the budgets passed to GPs.
Recent polls now suggest Labour is once again more trusted on health than the Tories. So that’s why the Prime Minister is clinging on to the pledge that he, unlike Labour, will preside over a rise in NHS spending.
The problem is, the only way he can keep his word is by resorting to the kind of creative accounting he used to berate his predecessor for.
The analysis by Patrick Worrall
