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29 July 2011

Cameron breaks his NHS spending pledge

Spending on the health service was cut by £766m last year.

By George Eaton

Earlier this week, I revealed that David Cameron had betrayed his pledge to protect Sure Start, now he’s broken another key election promise.

The PM has repeatedly said that spending on the health service will rise in “real terms” in each year of this Parliament. But figures from the Treasury (see Table 1.9) show that the NHS spent £101,985m from April 2010 to April 2011, down from £102,751m the previous year, and a real-terms cut of £766m.

George Osborne’s ostensible defence is that the year in question – 2010-11 – was the final year of Labour’s 2007 spending review. But as Ed Balls has just pointed out in a letter to the Chancellor, “[U]nder our plans NHS spending was to be £106.6 billion in 2010-11 … You have actually spent just £102.0 billion.”

In fairness, the coalition is on track to meet its pledge this year (see Table 1.9) with spending set to rise in real-terms from £101,985m to £103,026m. However, spending will then fall back to £102,861m the following year (2012-13). David Cameron is fond of boasting that the NHS budget will rise in cash terms by £12.5bn but what he forgets is that much of this increase 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.

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The real question now is whether the coalition will abandon its pledge or instead raise extra funding for the NHS, either through tax rises or through even greater cuts elsewhere.