Is the health budget falling or not?
Fraser Nelson 5:30pmBefore the election, the Conservatives promised they'd "protect" the NHS, which they defined as increasing its real-terms budget year-on-year. This is a rather dangerous promise because it makes ministers hostage to inflation. Now that inflation has surged, expectations have been revised upwards, and it looks like the NHS budget will suffer a real-terms cut. In its monthly update of City consensus forecasts, the Treasury has released new figures for inflation over the next five years.Apply the latest inflation figures to health spending in the last budget and it implies a £1bn shortfall . The graph below shows the change over five years:
Back in March, the IFS said that the government was in danger of breaking that pledge. As Pete explained at the time, this was not because of a change in the government's spending plans, but rather in the "GDP deflators": projections of how much £1 will be worth in 2014-15 compared to now. In March, it looked like the NHS spending plans would amount to an effective freeze. Now, they will decline.
Does this matter? Not to me: I think the government was daft to define "protection" as keeping a budget up. That is Labour logic, the type that saw education standards fall over 13 Labour years while ministers focused on the "investment" and assumed that standards must rise as a result of budget increases. Labour was right to say it would cut the NHS budget. The Canadian experience of fiscal consolidation shows that the pain must be spread equally. The NHS budget increased the most over the Labour years, so it is daft to suggest that it’s the only budget where cuts cannot be made.
But, the government made its pledge and ministers will now have to take flak over cuts in health spending, cuts that are so small to be within the margin of error. They only have themselves to
blame.
UPDATE: Andrew Neil put these figures to Andrew Lansley earlier on this evening and Lansley flatly rejected them, maintaining that the coalition's pledge to increase spending on
the NHS in real terms had not been knocked off course by higher than expected inflation. He stressed that "health spending is rising in reference to the GDP deflator".
When presented with figures showing health spending falling in real terms, Lansley replied, "I’m sorry that is simply not true". He complained that the figures were not taking into account "the actual amount spent in the NHS in 2010-11’. He claimed that health spending "rises by a small amount in real terms". He promised to "gladly put up the data" to prove this point. We're looking forward to it.
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TGF UKIP
October 2nd, 2011 6:57pm Report this commentI note that being as on message as ever Fraser, you are ensuring that there is no embarrassing CH coverage of Dave and the EU and his use of "the longer term" for any attempt to curb its encroachment.
"ABC, Anybody but Clarke" chanted the poor old Stupid Party, and what did they inflict on themselves - someone a fucking site worse than Clarke. At least with KC they wouldn't have had all the nauseating London PC stuff.
Olaf Rye
October 2nd, 2011 7:36pm Report this commentWe could achieve more for less if only there was a will to smash the quangos and the mass of bureaucrats that siphon money from the NHS for their salaries, pensions and offices whilst other bureaucrats claim that there are insufficient funds to provide us with the latest treatments and medication. This government has not gone after the faceless bureaucrats because, much like Labour, they need the votes of this large group of sycophants.
Hugo Chav
October 2nd, 2011 8:03pm Report this commentSimon Nixon - 28/9/11:
"For the past 60 years, most governments in the developed world pursued variants of the same economic strategy: trying to minimize the cost of capital for the corporate sector by subsidizing the financial sector and using the taxes on the higher profits to fund ever more generous spending promises. The result was to turn the state into a giant insurance operation, underwriting tail-risks across the economy, protecting people from the consequences of economic mistakes or social misfortune."
TrevorsDen
October 2nd, 2011 9:52pm Report this commentUKIP continues to be a pillock I see.
Brown pledged to make savings of 20 billion in the NHS over 4 years.
this is what the coal,ition are haviong to do.
Its purile to start scoring political points over this. The task is enormous.
This article points out -
'Our conversation in London began with whether we had too many acute hospitals. Of course we do, said the warhorses. Worse, they said, we have a system dominated by hospitals. People don’t seem to have noticed that health needs have changed dramatically. Healthcare is now mostly about caring for people, usually elderly, with multiple conditions. For many of these people social care is more important than healthcare, yet you must pay for social care but not healthcare. The traditional medical model of “diagnose, treat, cure” is almost finished, but we have a health system designed for patients with acute conditions dominated by hospitals, specialist doctors, death denial, and drugs.'
http://blogs.bmj.com/bmj/2011/06/21/richard-smith-the-nhs-debate-missing-most-of-what-matters/
It also points out the 'scissors of death' - a graph showing rising aged need and falling numbers of people to pay.
A similar graph could show the rising money pumped into the NHS over the years and now the falling sums that will be available (even under labour).
Occasional Ostrich
October 2nd, 2011 11:25pm Report this comment@Olaf Rye 7:36pm
Smashing Quangos . . . how is that done, exactly?
Tell each of their bosses that their budget is now zero, and their decisions will not be effected, starting . . . o-oh, tomorrow?
Is that difficult?
Olaf Rye
October 3rd, 2011 9:26am Report this commentQuite right, Occasional Ostrich. It is simple, but there is no political will because government loves to regulate us and probably genuinely believes that we are too foolish to survive without their help. We are dealing with the most committed and deluded statists.
TomTom
October 3rd, 2011 10:28am Report this commentTrevors Den is as usual spouting claptrap. He talks of LONDON which the nation knows is over-provisioned with hospitals and that most doctors are trained in London teaching hospitals.
Most metropolitan areas have one hospital trust, Leeds is the biggest with an £800 million budget; but London has many such Trusts.
It is London that needs to close hospitals not the rest of the country. It is London that has too many medical tourists, too many A&E patients, and is over-provided with NHS resources.
SO talk about London Trevor and stop trying to make London problems out to be national ones.
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