Cameron's NHS spending pledge is worthless

The PM claims that spending will rise but the figures show that it will be frozen or even cut.

One of David Cameron's "five guarantees" on the NHS is that spending on the health service will rise "in real terms" over the course of this Parliament. In his speech on the NHS today, the PM boasted that there would be "£11.5 billion more in cash for the NHS in 2015 than in 2010". He added: "We are not cutting the NHS. In fact, we are spending more on it."

Cameron is referring to the fact that spending on the NHS, which currently stands at £102.9 bn, will rise to £114.4bn by 2014-15, a cash increase of £11.5bn. But what he ignores is that all of this increase will be swallowed up by inflation. The purchasing power of the NHS will be progressively reduced as the price of drugs and equipment continues to rise.

Once we take inflation into account, health spending will be frozen or even cut. As Professor John Appleby, chief economist at the King's Fund, writes in the latest edition of the British Medical Journal, "by 2014-15 the amount of money the NHS has to spend in real terms, its purchasing power, will have gone down by 0.9%." Thus, not only will Cameron fail to meet his flagship pledge to increase spending on the NHS "in real terms", he will fail to even protect it from the cuts.

Of course, George Osborne could announce an inflation-busting increase in health spending to ensure the government keeps its pledge (although that would mean even larger cuts elsewhere). But for now, it's simply dishonest of Cameron to claim that he is raising spending on the NHS. Without any new money, his "spending guarantee" is worthless.

George Eaton is political editor of the New Statesman.

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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.