Why cutting the NHS would be bad policy and bad politics

There is no prospect of David Cameron taking up Liam Fox's suggestion of cutting spending on the health service.

Liam Fox's call for the ring-fence around NHS spending to be removed is one that is likely to attract much sympathy from Conservative activists. There is a common view that the health service, one of just two departments (the other being International Department) to have had its budget protected in real-terms, has been unfairly shielded from austerity, with even some on the left (among them Vince Cable) calling for cuts. 

In reality, the reverse is the case. Owing to the above-average rate of health inflation (most notably the cost of new drugs and medical equipment), the NHS requires real-terms rises just to stand still. As a recent Social Market Foundation paper noted, "A ‘flat real’ settlement for the NHS is mot what it sounds like since it is defined with reference to an irrelevant price index. To keep up with rising input costs, growing demand, and the public’s expectations for an adequate healthcare system, growth in spending on health has historically outstripped GDP growth." 

By historic standards, the NHS is undergoing austerity. Since 1950, health spending has grown at an average annual rate of 4%, but over the current Spending Review it will rise by an average of just 0.5%. As a result, in the words of the SMF, there has been "an effective cut of £16bn from the health budget in terms of what patients expect the NHS to deliver". Should the NHS receive flat real settlements for the three years from 2015-16 (as seems probable), this cut will increase to £34bn or 23%.

If they wish to avoid a significant fall in the quality and quantity of services, this government and future ones are left with three choices: to raise taxes, to cut spending elsewhere, or to impose patient charges. Fox argues that "we’ve tested to destruction the idea that simply throwing lots more money at the health service will make it better", but this ignores the significant improvements that health researchers found to have taken place under Labour (with patient satisfaction rising to a record high as a result). 

If that is reason enough for the Tories to avoid cutting NHS spending, it would also be terrible politics. As a ComRes/ITV News poll found last year, health is the most popular spending area among voters. Just 5% of voters believe the NHS budget should be reduced and 71% believe it should be increased. There is no prospect of Cameron and Osborne handing Labour a pre-election gift by pledging to cut spending.

Incidentally, it's worth correcting the myth, encouraged by Cameron, that Labour would have cut the NHS had it won the last election. In fact, in 2010, then-health secretary Andy Burnham pledged to protect spending, the difference being that the Tories promised to increase it. Burnham helpfully clarified this in an interview with the NS in 2010. 

Why shouldn't NHS spending be ring-fenced?

The ring-fence is what we proposed at the election and, in many ways, it is what I'm still arguing for, which is protection in real terms. Before the election, Labour calculated that if you gave the NHS protection in real terms -- so frozen in inflation -- it would allow you, on the other hand, to give schools inflation in real terms and give police inflation in real terms. Those are the three key services. The health service does not exist in isolation. By taking a more balanced approach to public spending, you can protect the three key services.

So your argument is that ring-fencing it in isolation makes it nonsense?

They're not ring-fencing it. They're increasing it. They're doing two things: they're accelerating the reduction in public spending, which I wouldn't have done, and they are also going to increase the NHS within that. So they went through the whole election campaign boasting that they were going to spend more than me and they're still doing it. Cameron's been saying it every week in the Commons: "Oh, the shadow health secretary wants to spend less on health than us."

As for what Labour's stance will be in 2015, Miliband all but confirmed in an interview with the BBC last year that he would not cut the NHS. He told Nick Robinson: "We're not going to be cutting the health service, I'm very clear about that. We will always be protecting the health service and will always make it a priority."

It's worth remembering that when Ed Balls announced his "zero-based" spending review (one that examines every item of spending), he signalled that health would be a candidate for a "pre-election spending commitment". Expect the Tories to adopt much the same approach. 

Former defence secretary Liam Fox speaks at the Conservative conference in 2011. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty Images.
Show Hide image

Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.