Health check

George Osborne's decision to ring-fence the £105.9bn National Health Service budget has attracted criticism from figures as diverse as the Tory ex-chancellor Nigel Lawson and the former Labour health secretary Andy Burnham. They argue that the NHS, which accounts for 14.9 per cent of all government spending, should be cut to limit reductions to public services elsewhere. But as the graph (right) shows, Britain continues to spend less than many other developed countries on health care. At 8.7 per cent of GDP, total spending is less than in 19 of the 34 Organisation for Economic Co-operation and Development (OECD) member states, including France, Germany, the United States, Canada, Italy and Spain.

Yet, owing to years of generous spending settlements by New Labour, public expenditure on health care, at 7.2 per cent of GDP, is now above the OECD average of 6.5 per cent. Between 1997 and 2010, NHS spending increased by 5.7 per cent a year in real terms, compared to 3.2 per cent under the Conservatives from 1979 to 1997. The coalition has pledged to increase health spending by 0.4 per cent across the four years to 2014-2015, the tightest spending settlement since the 1950s. But these small increases are in danger of being swallowed up by higher-than-expected inflation.

Spending will stay frozen at current levels in 2011-2012 and will fall by 0.1 per cent in 2012-2013. Had it not been for lower-than-expected spending in 2010-2011, there would have been a small real-terms cut in 2011-2012. But, to make this pledge a reality, the government will have to pump more money into the NHS, potentially leading to even deeper cuts elsewhere. David Cameron's promise to "cut the deficit, not the NHS" is proving to be one of his most expensive.