The NHS, which David Cameron promised was “safe in my hands”, faces a budget squeeze unparallelled in more than half a century – despite Tory pre-election pledges of real terms year-on-year spending increases.
Today’s IFS report, “NHS and social care funding: the outlook to 2021–22″, shows:
• The real freeze in NHS spending planned for 2010−11 to 2014−15 would, if delivered, be the tightest four-year period of funding for the NHS in the last fifty years;
• Meeting the tight plans for public spending pencilled in for 2015–16 and 2016–17 – even after allowing for further welfare cuts as hinted at in the budget – would require real spending on public services to be cut by an average of 1.7 per cent a year over these two years;
• Because spending on the English NHS is so big – accounting for 23% of public service spending in 2010-11 – decisions on English NHS funding matter a great deal for all other areas of public service spending;
• Continuing the real freeze in English NHS spending over 2015–16 and 2016–17 would mean cutting spending on other public services by an average 2.3 per cent a year;
• Increasing English NHS spending in line with national income between 2015–16 and 2021–22 would still leave the NHS budget growing less quickly than the OBR’s analysis suggests might be needed to keep pace with the costs of an ageing population over that period;
• This settlement would, under current projections, also leave spending on other public services growing at just 0.6 per cent a year in real terms over the seven-year period from April 2015;
• Increasing English NHS spending in line with national income over the seven years from April 2015 whilst also increasing other public service spending by 1% a year in real terms – lower than forecast growth in national income over that period – requires an increase of taxation or borrowing, or further welfare cuts amounting to £9 billion.
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• How long can the NHS go on like this, Mr Cameron? 11 Apr 2011
The IFS say:
“The report also assesses future prospects for social care funding. Demographic pressures are increasing demand for social care, while the recent (Dilnot) Commission on Funding of Care and Support proposed a reform of the system for funding social care in England that would increase the cost to the taxpayer.
“The result of combining the Commission’s recommendations for funding social care with policies that keep English NHS spending constant as a share of national income is that all other areas of public service spending, would grow at just 0.3 per cent a year over the seven years from April 2015, absent any tax increases, borrowing increases or further cuts to welfare spending.”
Nuffield Trust Chief Economist Anita Charlesworth said the squeeze amounted to “an unprecedented productivity challenge”, adding:
“If the government can increase taxation or borrowing, cut the welfare bill further or generate greater efficiencies in other parts of the public sector then the NHS might be in line for a real terms increase, albeit at a rate that does not keep pace with demographic pressures.
“However if any of those options are judged to be too difficult politically or too damaging to vulnerable groups and other key public services, health spending will have to fall in real terms.”
A real terms fall in health spending – yet another broken Cameron promise.