The claim
“We will not cut spending on the NHS – we will increase it.”
David Cameron, 7 June 2011
The background
At the 2010 spending review the coalition promised they would increase the NHS budget year-on-year in real terms.
The increase was the smallest possible rise imaginable – 0.1 per cent a year over the next four years.
So it wasn’t a “cut” but it amounted to one of the biggest squeezes on resources since the health service was founded in 1948.
The NHS had been used to getting average year-on-year budget rises of about 7 per cent on average under Labour, and experts like the King’s Fund said 1 per cent a year was the minimum growth needed to absorb the rising cost of an ageing population and other demographic pressures.
The tiny scale of the above-inflation rise also meant the government would always be vulnerable to changes in inflation if it wanted to keep its promise.
A small adjustment to the rate of inflation could turn a real-terms rise into a cut overnight. The government “was sailing perilously close to the wind”, as the Institute for Fiscal Studies (IFS) put it.
Today, according to shadow health secretary Andy Burnham, the boat tipped over. The Labour frontbencher accused Mr Cameron of “betraying the NHS”.
Health minister Simon Burns replied by insisting that “the government has met its promised to provide a real terms increase in the health budget”. Spending on “frontline” services was also up and NHS trusts had managed to build up a surplus to spend next year, the minister added.
Was this a good news day for the government or another broken promise?
The analysis
Andy Burnham’s ammunition comes from these new Treasury figures, which show the actual amount spend by each government department in 2011/12.
In real terms, allowing for adjustments to inflation, the outturn for NHS (health) fell from £104.353bn to £104.333bn.
That’s a fall of 0.02 per cent or £20 million, which means numerous ministerial promises to increase NHS spending have proved, albeit by the tiniest of margins, to be false.
So how can Simon Burns say the government has “met its promise” and keep a straight face? The Department of Health told us this was because the minister was choosing his words carefully and talking about “the health budget”, not actual health spending.
That doesn’t get Mr Cameron off the hook because he’s always talked about “spending”, and it may seem a pedantic distinction to voters who are more worried about what the government has actually done, but the point is an interesting one.
The official government line is that the budget allocation really is still going up in real terms year-on-year, it’s just that the Department of Health has spent less than the total amount available to it.
That’s right: in the depths of austerity, the Department actually opted to spend more than £1bn less on health last year than it could have.
Whether that was by oversight or design is impossible to say, although the official line is that “faster than expected savings from bureaucracy and £400 million saving on IT projects” explain the shortfall.
So the strange picture being painted for us is one of the biggest bureacratic machines in Whitehall being taken by surprise by its own success in making efficiency savings, and choosing to hand the extra cash back to the Treasury rather than spend it on, say, a new hospital.
What happened to the underspend, which is about £1.6bn compared to the 2010 budget? Will the surplus be ploughed into healthcare next year? Err…no. The Treasury has clawed most of it back, minus around £300,000.
The NHS balance sheet must be looking pretty healthy if money like that is allowed to flow back into Treasury coffers.
And indeed Mr Burns paints a rosy picture of the financial situation, saying: “The amount spent on frontline services in 2011/12 increased by £3.4 billion in cash terms…while spending has increased on patients, we have reduced inefficient spending.”
There’s also an entirely separate surplus of another £1.6bn that’s been built up by local NHS organisations, and this extra cash will carry over into next year.
Mr Burns went on: “Our increases in frontline spending are already showing results – waiting times have been kept low, there are more doctors, the NHS has performed more diagnostic tests and planned operations, and infections have been reduced even further.”
The length of time it takes to train a doctor means a rise in their ranks can’t possibly be the result of recent spending decisions. Apart from that, all these things are true, and indeed the King’s Fund gave the NHS a fairly good bill of health in its latest check-up.
The verdict
If Mr Cameron was being really slippery, he might say that “spending on the NHS” doesn’t mean exactly the same as “NHS (health)” as recorded in the Treasury’s accounts.
Some Food Standards Agency money is included in that heading, and some NHS spending is done by Wales and Northern Ireland.
But we don’t have a reliable figure for “total NHS spending” that strips these out.
But on the only reasonable measure we have, the government has broken its promise to protect NHS spending. And that’s not just because of the technicalities of fluctuating inflation, it’s because of a deliberate policy of underspending.
The promise may have been broken by only the tiniest of margins – 0.02 per cent! – but that should be viewed in the context of the historically low 2010 funding settlement and the unrelenting long-term pressures on the health services.
The IFS said this week that times are likely to be so tough over the next decade that the NHS may no longer be able to provide some services for free, something that would change the fundamental principles that shaped the service.
We’ll give the last word to the think-tank’s Rowena Crawford, who told us that whether the NHS gets +0.1 per cent or -0.02 per cent growth in a year “makes very little real difference”.
She added: “While one “breaks the Government’s pledge” and the other doesn’t, the NHS still essentially faces a real freeze in its budget which it will find very constraining given increases in demand for healthcare and the large real increases in spending it has enjoyed for the past decade or so.”
By Patrick Worrall
