May to announce extra £20bn for NHS by 2023 as she prepares to raise taxes

Prime minister will break with eight years of austerity but risks ridicule by claiming funding boost will come partly from 'Brexit dividend'

The crisis-hit NHS will receive an extra £20bn a year by 2023, Theresa May will announce – but she will warn the public that taxes must rise to pay for the boost.

The extra funding – to mark the 70th birthday of the health service – will mark a dramatic break with eight years of austerity and follows a difficult battle with the Treasury for more funds.

However, it appeared the annual real-terms increase will be little more than 3 per cent, not the 4 per cent pleaded for by Simon Stevens, the outspoken NHS England chief executive.

The prime minister will also invite ridicule and allegations that she is using the NHS crisis to score political points by claiming the funding will come in part from a “Brexit dividend”, because the UK will no longer be paying huge sums for EU membership.

In fact the Bank of England has calculated the UK is already around £400m a week worse off since the referendum result – more than the £350m a week the Leave campaign pledged for the NHS.

Furthermore, No 10 admitted that people will “be asked to contribute a bit more for the NHS in a fair and balanced way”, acknowledging that higher taxes will be needed.

Chancellor Philip Hammond is expected to opt for “stealth taxes”, by delaying or scrapping Conservative promises to raise income tax thresholds – which will anger many Tory MPs.

Mr Hammond may also be forced to cancel planned reductions in corporation tax, although he will be desperate to avoid having to do so.

The cash will be spent on more doctors and nurses in hospitals, better mental health care and improving cancer survival rates, as well as to tackling the closely linked crisis in social care.

However, it was also unclear how much of the money would be “frontloaded” and how much be only be delivered towards the end of the five-year spending plan, to start next April.

Some of the answers may emerge when the prime minister is quizzed on the details of the package on the BBC’s Andrew Marr Show on Sunday morning.

Jeremy Hunt, the health and social care secretary – who is believed to have been fighting for a rise of at least £28bn a year over five years – said: “This long-term plan and historic funding boost is a fitting birthday present for our most loved institution.

“Like no other organisation could ever hope to be, the NHS is there for every family at the best and worst of times, from the wonder of birth to the devastation of death, living and breathing those very British values of decency, fairness and compassion.

“It recognises the superhuman efforts made by staff over the last few years to maintain services in the face of rapidly growing demand. But it also presents a big opportunity for the NHS to write an entirely new chapter in its history.”

Mr Hunt said the extra funding would be accompanied by a “10-year plan for the health service”, doctor-led reforms to ensure the money was well spent.

The announcement, to be followed by a major speech by Ms May on Monday, marks an acceptance that the Conservatives could not go into the next general election with the NHS still in crisis.

Patients are waiting longer for surgery and to be treated in overcrowded A&E departments, with targets missed year-on-year.

However, an analysis by the Health Foundation said even a 3.3 per cent annual rise would be too little to prevent patients having to wait even longer for care.

“Annual increases of 3.3 per cent a year above inflation are the minimum required to prevent services from further decline,” said Professor Anita Charlesworth, the organisation’s chief economist recently.

“But stemming decline should not be the goal for the NHS in its 70th year.”

Mr Stevens said: ”As the NHS turns 70, we can now face the next five years with renewed certainty. This multi-year settlement provides the funding we need to shape a long-term plan for key improvements in cancer, mental health and other critical services.

“And the invitation to the NHS to develop consensus proposals for legislation will help accelerate the move to more integrated care, and ensure taxpayers’ money is spent to maximum benefit.”

Labour is certain to say the funding is nowhere near enough and is a long way short of the extra £37bn the party has promised over the next parliament if in office. .

The details of the announcement will also be closely scrutinised for its plans for social care, which Mr Hunt wants to “truly integrate” within the NHS.

There have been suggestions that the government is backing away from such a radical solution, with a long-awaited green paper on care due within weeks.