18 June 2018

The Government’s plan for a 3.4% increase in NHS spending is welcome as far as it goes but we need more detail, says Nicholas Timmins

A lot better than nothing, but less than most analysts believe to be necessary. And likely, one fears, to unravel somewhat when the full details are finally known.

There were no hard Treasury figures published to go alongside Theresa May’s weekend announcement of a five year settlement of an average 3.4% real terms increase for the NHS in England. Until there are, it would be wise to reserve judgement.

The 3.4% appears to relate only to NHS services – i.e. the budget for NHS England – not to health spending. So in terms of health expenditure, the real rise is already smaller than the headline suggests. The rest of health spending (some £15bn a year) includes public health, education and training, research and development and elements of infrastructure – all vital parts of a health service and investments in its future.

At what level are these to be protected or cut? Answer, don’t know. And don’t forget that George Osborne’s £8bn promise for the NHS back in 2015 was funded in part by cuts to the public health budget.

Is this 3.4% on top of the funding for the recently agreed three-year pay deal for many NHS staff – which Philip Hammond had already promised to fund? Or does this get subsumed into that? Answer, don’t know.

There is nothing – perhaps unsurprisingly – in this announcement for social care, despite the widespread acknowledgement that health and social care march hand in hand. Fresh news on that is – yet again – promised for later this year. But there is nothing here to let us know whether it stays at current levels, gets cut further to help pay for this, or whether it might yet be enhanced.

So the weekend fulfilment of the PM's promise of a “multi-year settlement” for the NHS begs more questions than it offers answers. This was billed as the Government’s birthday present to the  NHS for its 70th anniversary, but already it looks like a big glittery box that may prove, when all is finally known around Budget time in the autumn, to have distinctly disappointing contents – and that is even before one asks how it will be funded.

The 'Brexit dividend' is a fiction

The 'Brexit dividend' which Theresa May highlighted as one source of money is, in terms of the UK paying less into the EU in the short term, a fiction, as my colleague Gemma Tetlow discusses elsewhere on this site.

Over the long term revenue – NHS expenditure on services as opposed to capital – should not be funded out of borrowing. Which leaves growth (currently anaemic) delivering higher tax revenues, or higher taxes. Plainly the latter. But from where and when is also an unknown, and this is a government that has already had difficulty getting through perfectly sensible tax rises – the increase in national insurance for the self-employed, for example. 

Furthermore, the glitter on the box of this birthday present has been tarnished by the unedifying way in which it has been spun to be part of the great political game of Brexit. Spun as a present to the leave side, as the prime minister links the money to Brexit being achieved. An apparent threat to the Remainers, namely that, if they resist the harder forms of Brexit they are somehow opposed to more cash for the NHS, so they need to tone down their opposition. That is grubby politics that won’t hold. Pretty it is not.

Back in 1998, before the then Labour Government genuinely did put a lot more money into the NHS, Gordon Brown spun that year’s budget as providing “an extra £21bn for the NHS” when all he did was add up the cash rises for the coming years, not the real terms increases. That promise proved to be a lot less than it seemed. It would be very sad if the NHS’s 70th birthday present turns out to be less than it first seemed.