Vince Cable and Liam Fox unite on need for NHS cuts

An unlikely political alliance is formed as both men argue that health spending should not be protected while other services are cut.

Liam Fox might be one of the Tory supply-siders whom Vince Cable has accused of waging "jihad" against public services but could the pair be about to form an unlikely alliance? Both have today called for the government to cut spending on the NHS in order to free up funds for use elsewhere. 

In a speech this morning at the Institute of Economic Affairs, Fox will call for George Osborne to end the ring-fencing of the NHS, schools and international development and to use the money saved to dramatically reduce taxes, including the temporary abolition of capital gains tax, and to limit cuts to areas such as defence. 

Asked on the Today programme whether he agreed with Fox's stance on ring-fencing, Cable said that while there was "an argument for protecting key priorities" such as the overseas aid and science budgets, ring-fencing was not "a very sensible" long-term approach. When pressed by John Humphrys, he notably refused to say that the government should continue to protect the NHS, implying that it could be targeted for cuts (one wonders if the Tories will take the chance to demonstrate their "commitment" to the health service by slapping him down). 

With an eye to the current divisions over this summer's Spending Review, Cable said: "The problem about ring-fencing as an overall approach to policy, is that when you have 80 per cent of all government spending that’s ring-fenced, it means all future pressures then come on things like the army, the police, local government, skills and universities, the rest that I’m responsible for. So you get a very unbalanced approach to public spending."

It's worth noting that the Business Secretary is a long-standing critic of ring-fencing. At the last general election, the Liberal Democrats, unlike the Conservatives, argued that no area of public spending should spared from cuts. As Cable told the 2010 Lib Dem spring conference, "There can be no ring-fencing if we are serious about getting the public finances back on track". 

For now, there is little prospect of George Osborne following Cable and Fox's advice. Aware that no area of public spending is more popular with voters, Osborne and Cameron rightly believe that it would be politically toxic for the Tories to cut the NHS. In addition, the above-average rate of inflation in the health service means that there is a strong case for ensuring that its budget remains, at the very least, flat in real-terms. But as Osborne continues to struggle to extract cuts from the "National Union of Ministers", the debate on ring-fencing is unlikely to go away. 

Business Secretary Vince Cable arrives for a cabinet meeting at 10 Downing Street. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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The big problem for the NHS? Local government cuts

Even a U-Turn on planned cuts to the service itself will still leave the NHS under heavy pressure. 

38Degrees has uncovered a series of grisly plans for the NHS over the coming years. Among the highlights: severe cuts to frontline services at the Midland Metropolitan Hospital, including but limited to the closure of its Accident and Emergency department. Elsewhere, one of three hospitals in Leicester, Leicestershire and Rutland are to be shuttered, while there will be cuts to acute services in Suffolk and North East Essex.

These cuts come despite an additional £8bn annual cash injection into the NHS, characterised as the bare minimum needed by Simon Stevens, the head of NHS England.

The cuts are outlined in draft sustainability and transformation plans (STP) that will be approved in October before kicking off a period of wider consultation.

The problem for the NHS is twofold: although its funding remains ringfenced, healthcare inflation means that in reality, the health service requires above-inflation increases to stand still. But the second, bigger problem aren’t cuts to the NHS but to the rest of government spending, particularly local government cuts.

That has seen more pressure on hospital beds as outpatients who require further non-emergency care have nowhere to go, increasing lifestyle problems as cash-strapped councils either close or increase prices at subsidised local authority gyms, build on green space to make the best out of Britain’s booming property market, and cut other corners to manage the growing backlog of devolved cuts.

All of which means even a bigger supply of cash for the NHS than the £8bn promised at the last election – even the bonanza pledged by Vote Leave in the referendum, in fact – will still find itself disappearing down the cracks left by cuts elsewhere. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.