Budget '97: pounds 1.2bn gold mine eases pressure

The Winners: HOSPITALS

Frank Dobson struck gold yesterday. The extra pounds 1.2bn for the NHS in 1998/99 will ease the pressure on the health service which was otherwise facing a year of unparalleled austerity.

However doctors warned that the Chancellor's largesse might come a winter too late. The British Medical Association said earlier this week that hospitals would be reduced to an emergency-only service and waiting lists would grow to record levels without an extra injection of funds soon.

Next year's increase of an extra pounds 1.2bn for the NHS in the UK, above what was already planned, will bring the total rise for England to pounds 1.75bn,up 5 per cent in cash terms, equivalent to 2.25 per cent after allowing for inflation. This compares with the 0.2 per cent real growth planned by former Chancellor Kenneth Clarke, to which the Labour government had committed itself until yesterday. The NHS Confederation said the increase would greatly encourage a cash-strapped service. Philip Hunt, chief executive, said: "I was amazed. The word we were getting was that there was definitely no more money."

Many NHS trusts and health authorities had financial problems with deficits predicted to grow to pounds 750m by the end of the financial year, an estimate byKing's Fund, the independent health policy think-tank.

Mr Hunt said: "It doesn't remove the financial problems at a stroke. We have still got to get through this year. The problem was knowing there was no growth next year meant we had no flexibility and no possibility of planning the deficits over two or three years. This has given us a breathing space."

Dr Sandy Macara, chairman of the BMA, said: "The Government has listened to the distress calls from doctors. The increase for the NHS next year is sufficient to wipe out NHS deficits and give us a fresh start. We are delighted to see that for the first time there is no assumption of efficiency savings in next year's totals."

He said he hoped the pounds 160m raised from the 19p increase in cigarette prices, which would itself save lives, would go to a fire-fighting fund to get the NHS through the winter. Savings from the abolition of tax relief on private medical insurance should also be diverted to the NHS to cope with the extra demand from elderly people.

Mr Dobson, the Health Secretary, said the NHS would benefit from cuts in bureaucracy and a scheme to reduce fraud.

He said: "Extra money will not solve all the difficulties left behind by the previous government, but it does enable everyone to focus on how to make best use of these resources while our reform agenda starts to take effect.

"I now want to work with doctors, nurses and everybody else in the NHS to make sure that we get the maximum possible value for patients from the money that has been made available."