George Osborne made hundreds of millions of pounds in “secret cuts” to the NHS in his Budget, according to the small print of his Budget document.
Research compiled by the Liberal Democrats suggests £650 million was taken out of the health service by changes to public sector pensions that leave employers fielding extra costs.
One of these employers is the National Health Service, the largest public employer in the country – meaning less cash will be available to spend on front line services once the new costs are met.
Liberal Democrat leader Tim Farron said the Chancellor was trying to “pull the wool over people’s eyes” but the Government said employers had time to prepare for the extra costs.
“Even by George Osborne’s standards, this is a vicious attack on our health service, schools and public services,” Mr Farron said.
“He made grand promises about funding the NHS and is now making secret cuts by the back door.
“David Cameron said he would do whatever it takes to fill the NHS black hole, and we’ve now discovered that actually means cutting £650 million just to help the Chancellor’s budget-day balance sheet.
“George Osborne cannot pull the wool over people’s eyes. Choosing to ask schools, hospitals, and forces to pay £2 billion extra in pension contributions has a real cost, and vital services will have to pick up the bill.
“The Conservatives simply cannot be trusted to protect the services communities rely on up and down the country.”
The Chancellor announced that he would change the so-called “discount rate” for the pensions, meaning central government will pay less but front line employers will pay more.
BBC News reports that a total of £1 billion is likely to be taken from health and education combined by the changes.
The additional forced budget pressure on the NHS comes weeks after the Health Foundation warned the NHS's financial position has “substantially deteriorated” in recent years.
All regions of the English NHS have gone from a surplus in 2012/13 to all but one being in overall deficit in 2014/5, according to official figures.
Despite the looming financial crisis, the National Health Service received only brief passing mentions in the Chancellor’s Budget speech to the House of Commons on Wednesday.
Mr Osborne said during the address that he was increasing funding for the service.
George Osborne 2016 budget at a glance
George Osborne 2016 budget at a glance
1/8 Debt forecasts up, growth forecasts down
The OBR’s new forecasts have downgraded growth in all of the next five years to 2020. The watchdog says the economy will only grow by 2 per cent in 2016, as opposed to the anticipated 2.4 per cent. Borrowing and productivity growth are also down – with forecast borrowing in 2018-198 £16 billion higher
2/8 New tax on sugary drinks
The Chancellor announced a new tax on sugary soft drinks, which is projected to raise £520 million. At least some of the money will be spent on doubling funding for school sport, the Chancellor says. Labour leader Jeremy Corbyn welcomed the levy
3/8 Tax cut for higher earners paying the 40p rate
The Chancellor has raised the threshold for paying the higher rate of income tax to £45,000. The higher rate is paid by roughly the richest 15 per cent, currently people earning over £42,386
4/8 Increase in tax-free income tax threshold
The tax-free allowance increase to £11,500 in April 2017 – up from £10,600 now. The Chancellor previously raised the allowance from £6,475 in coalition with the Liberal Democrats. The Conservative manifesto pledges to put the allowance up to £12,500 by the end of the Parliament
5/8 New devolution for counties and powers for London and Manchester
The West of England, the East of England and Greater Lincolnshire will all get elected mayor-led combined authorities with new powers. The Chancellor says they are backed by £1 billion new funding. Greater Manchester will get new powers of criminal justice while London will keep its business rates – giving whoever is elected Mayor a lot more spending power
6/8 Fuel duty frozen for sixth year running
The Chancellor had planned to end the fuel duty freeze he had put in place for the whole previous parliament. In the event, he has announced a freeze for another year
7/8 All schools to become academies
As reported yesterday the Chancellor unveiled legislation to turn all schools into academies. He said all schools would either be academies or on their way to being academies by 2020, and that funding had been set aside to fund the change
8/8 Lifetime ISA
The Chancellor announced a new savings account to encourage under-40s to save for retirement – for every £4 saved, the Government will top this up by £1 up to the value of £4,000 a year. Tax-free ISAs will also be increased from £15,000 to £20,000
“The country will be spending no more than the country raises in taxes,” he said of his fiscal targets.
“We are achieving this while at the same time increasing resources for our NHS and schools, building new infrastructure and increasing our security at home and abroad.”
A Treasury spokesperson defended the changes: “We're committed to regular revaluation to ensure public sector pension costs are met.
“The Budget announcement means employers have three years to prepare and we think they should be well placed to absorb extra cost of contributions – especially because inflationary pressures are significantly lower than expected when budgets were set at spending review.”