Leader: The NHS and the Conservative crisis

There is, as Mrs May knows, no such thing as a “Brexit dividend” to fund an increase in health service spending.

Theresa May makes a speech on the NHS at the Royal Free Hospital, north London on 18 June (Photo By Credit: Stefan Rousseau/AFP/Getty Images)

Since 2010, the Conservatives have boasted that NHS spending has been “protected” from cuts. Though technically true, this is in reality a convenient fiction. The health service has endured the longest period of austerity in its 70-year history: spending has risen at an annual rate of just 1.3 per cent compared to the historical average of 4 per cent. An ageing population – with people living longer but not healthier lives – and the rising costs of drugs and technology mean that the NHS depends on significant increases merely to stand still. As we have charted in our “Crumbling Britain” series, patients have borne the cost in delayed operations, cancelled appointments and GP surgery closures.

Theresa May’s announcement of a £20bn increase in NHS spending by 2023/24 (3.4 per cent a year) was a belated admission that the status quo was unsustainable. But the Prime Minister undermined her policy by claiming that it would be partly funded by a “Brexit dividend”.

There is, as Mrs May knows, no such thing. Since the government has already agreed to maintain existing EU spending in the UK (in areas such as agriculture and higher education) and to pay a “divorce bill” of £35-39bn, there is no largesse left for the NHS. More importantly, Brexit is forecast by the Office for Budget Responsibility (OBR) to harm, rather than strengthen, the public finances. After the EU referendum, the OBR estimated a net fiscal cost of £15bn a year (or nearly £300m a week) by 2020/21.

But the Prime Minister’s admission that tax rises would also be required to fund the NHS nevertheless represented a defining moment. The traditional Thatcherite aim of shrinking the state has been rejected. As Mrs May has recognised, voters favour a social democratic approach and the preservation of the public realm.

Yet though an increase in NHS spending is necessary, it will not be sufficient. In recent years, the social care crisis has inflicted ever greater pressure on the health service (which has been forced to act as a provider of last resort). But the government, haunted by its last attempt at reform – “the dementia tax” – has merely promised another green paper this autumn. The eventual solution, as we have long argued, must encompass greater taxation of wealth, most notably static assets such as housing and land. Even now, the council tax bands are based on property valuations made in 1991.

As Mrs May’s former co-chief of staff Nick Timothy writes in his essay this week, the Tories remain profoundly divided over their ideological purpose. Philip Hammond, the dry Chancellor who fought against the NHS promise, has warned the cabinet that austerity will remain in other areas including schools, defence, prisons and the police. Many Tories, who reluctantly accept the totemic status of the health service, continue to reject tax rises and government borrowing.

The NHS announcement was a panicked attempt to neutralise the threat from Labour and to strengthen Mrs May’s standing among the Brexiteers. But until the Conservative Party resolves its intellectual crisis, it will struggle to do more than just about manage.

The handshakes of history

What does a handshake reveal about the fragility of the world order? When Ronald Reagan met Mikhail Gorbachev for the first time, in Geneva in November 1985, the young Soviet leader recalled that their handshake was like a “spark of electric mutual trust which ignited between us”. It was the beginning of an unlikely relationship that considerably eased tensions between the two Cold War-era superpowers.

As a former reality TV star, Donald Trump likes stylised set pieces and grand public occasions. His summit with the North Korean dictator Kim Jong-un in Singapore allowed him to grandstand and posture. There was also a warm handshake. On 18 June, President Trump, who once refused ostentatiously to shake Angela Merkel’s hand after a bilateral meeting, traduced the German chancellor on Twitter. If, as David Reynolds writes, “summitry is all about symbolism”, the recent G7 summit in Canada exposed the deepening rift between the US and its long-time allies. And on this occasion it mattered little that Emmanuel Macron grabbed Mr Trump’s hand as if in desperate search of reassurance: the situation is much worse than the French president thought.