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.