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.

Photo: Getty Images/Carl Court
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Nigel Farage: welcoming refugees will lead to "migrant tide" of jihadists

Ukip's leader Nigel Farage claims that housing refugees will allow Isis to smuggle in "jihadists".

Nigel Farage has warned that granting sanctuary to refugees could result in Britain being influenced by Isis. 

In remarks that were immediately condemned online, the Ukip leader said "When ISIS say they will flood the migrant tide with 500,000 of their own jihadists, we'd better listen", before saying that Angela Merkel, the German Chancellor, had done something "very dangerous" in attempting to host refugees, saying that she was "compounding the pull factors" that lead migrants to attempt the treacherous Mediterranean crossing.

Farage, who has four children, said that as a father, he was "horrified" by the photographs of small children drowned on a European beach, but said housing more refugees would simply make the problem worse. 

The Ukip leader, who failed for the fifth successive occassion to be elected as an MP in May, said he welcomed the prospect of a Jeremy Corbyn victory, describing it as a "good result". Corbyn is more sceptical about the European Union than his rivals for the Labour leadership, which Farage believes will provide the nascent Out campaign with a boost. 

 

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