Why Theresa May's £20bn isn't really a 70th birthday present for the NHS

Ben Chu
Economics Editor
Sunday 17 June 2018 14:16 BST
Britain's Prime Minister Theresa May signs the pot of patient Jade Myers, 15 of London, who broke her leg falling off a wall, during a visit to The Royal Free Hospital on June 18, 2018 in London, England
Britain's Prime Minister Theresa May signs the pot of patient Jade Myers, 15 of London, who broke her leg falling off a wall, during a visit to The Royal Free Hospital on June 18, 2018 in London, England (Dan Kitwood-WPA Pool/Getty Images)

Is it rude to tell lies to someone on their birthday?

It seems that the National Health Service’s 70th anniversary present from government ministers is to be a big box full of dissimulation and crass propaganda.

Theresa May’s claim today that the agreed increase in funds for the NHS over the next five years represents some sort of “Brexit dividend” is an insult to the intelligence of patients, health workers and the wider electorate.

The government’s own official forecasts, produced by the Office for Budget Responsibility (OBR), show that leaving the European Union will be a drag on the growth of the UK economy, and therefore the resources available for public services, by around £15bn a year.

And, crucially, this hit to the public finances will be larger than the size of the net annual contribution from the UK taxpayer into the European Union budget.

If ministers think that the OBR’s projections are wrong, or grossly pessimistic, let them say so. Otherwise, they should stop using the words “Brexit dividend”.

Let’s be absolutely clear: there will be no Brexit dividend for the public finances – there will, rather, be a Brexit bashing.

The claim from ministers, that this latest pledge of £20bn a year extra in five years’ time for the health service represents historic spending largesse – “the largest-ever fiscal event for one government department” is one such boast - is no less disingenuous.

Those cash sums translate into a real terms spending increase for the NHS of 3.4 per cent a year until 2023.

Yes, that’s up on the 2.3 per cent average increase since 2015 and the 1.1 per cent increases seen in the five years of the coalition after 2010.

But historically significant? Innumerate nonsense. Average real spending increases on the health service since its foundation in 1948 have been 3.7 per cent a year.

And under the Labour government spending increases averaged 6 per cent a year.

The years after 2010 represented the biggest spending squeeze on the health service since its foundation.

This is a return to normal service, not some kind of spending splurge.

If you starve someone for five years and then pledge to give them bread and water every day for the following five you do not get the right to pose as the soul of generosity.

Let’s be clear about the scale of this funding package by continental European standards too.

In an interview the health secretary, Jeremy Hunt, suggests the money will put the NHS “among Europe’s best”.

In the UK we currently devote around seven in every hundred pounds of our GDP to public health spending. That’s below the proportion in Germany, Sweden, France, the Netherlands, Austria and Belgium.

This hike in funding will, at the very best, close that deficit a little. In all likelihood, given those countries will increase resources to their health services too as their population profile ages, it will merely prevent it rising further.

Never mind the political hot air, we should focus on how much the NHS actually needs. A major study by the Institute for Fiscal Studies and the Health Foundation last month estimated that annual real terms increases of 4 per cent a year (not 3.4 per cent) are necessary to actually improve the performance of the health service after almost a decade of effective cuts. And this spending commitment must be sustained for the next 15 years, not just the next five.

And all this is before even mentioning our collapsing adult social care service, which really ought to be considered as an element of health spending given the drastic knock-on impacts from cuts to councils’ elderly support on the ability of hospitals to discharge frail in-patients.

About social care funding – hacked back by 8 per cent over the past eight years – we have heard nothing from ministers. But expert analysis suggests it too needs an urgent infusion of funds.

The most ambitious claim one can make for this financial settlement is that it will keep the health show on the road a little longer.

This is less of a birthday present for the NHS than a puncture repair kit.

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