Labour and NHS Funding

Here's the evidence about how much Labour intended to spend on the NHS had the won the election.

The March 2010 budget said:

6.13 In the 2009 Pre-Budget Report the Government made a clear commitment to protect key frontline public service priorities in 2011-12 and 2012-13 and announced that:
• NHS frontline spending – the 95 per cent of near-cash funding that supports
patient care – will rise in line with inflation;

This says that Darling had allocated, for the two financial years 2011/12 and 2012/13, funding to rise with inflation. In real terms this is flat funding. (Bear in mind that between 1998 and 2009, in real terms, there was an average rise of 6% per year. Flat funding, while not a cut, would still feel bad.)

In the October Spending Review Osborne allocated, at that time, a real terms increase of 0.1% per year for the spending review period. However, Prof John Appleby of the Kings Fund has since calculated (using more recent OBR figures for inflation) that this is a real terms cut of 0.062%. Since this is a small percentage, I think that we can say that Osborne's figures mean flat funding for the spending review period. Indeed, Sir David Nicholson (the chief executive of the NHS) has acknowledged that the NHS will receive flat funding.

So basically, the Darling budget and the Osborne budget give the NHS the same amount.

Then there is the "efficiency savings" issue. In the 2010/11 Operating Framework, Burnham said that the NHS would have to make the £15-20bn "efficiency savings" over four years. These "efficiency savings" were identified by McKinsey although it is quite clear that neither McKinsey, nor the NHS, know where these "savings" will come from. The Labour "efficiency savings" are, say, £3.8bn to £5bn a year for each of 4 years. When Lansley took over the NHS the "efficiency savings" morphed into £20bn over five years (or £4bn a year for each of the five years).

We all know that an "efficiency saving" is a cut (it is Brownian), and that both Labour and the Conservatives have pledged to make them. We also know that attempts by government to make "efficiency savings" have always failed to hit their target. Put this together and it is reasonable to say that under Labour there would have been at least (but most likely, at most) £3.75bn "efficiency savings" each year and under the Conservatives there will be £4bn "efficiency savings" every year. That means that Labour would have spent more.

Now bear in mind that reorganisation of the NHS (for which the Conservative government has no mandate) will cost £1.7bn (government's figures) or £2-3bn (Manchester Business School) or £20bn (Civitas).

So given all of these figures it is clear that the Conservatives will spend less on healthcare than Labour would have.

So where does this idea that "Labour would have cut the NHS" come from?

The only reference seems to come from last June. Andy Burnham misinterpreted Cameron's pledge to "ringfence the NHS". Burnham (and, I suspect, most of the public) thought that would mean that the NHS would continue to get real terms increase. The Guardian in June 2010 said:

He said he assumed the Conservative commitment on the spending would lead to extra NHS expenditure, amounting to more than 1% a year, coming to more than £4bn over the parliament, which would mean even larger reductions for schools and local government.

Burnham, fully knowing that Osborne was intending to cut £80bn of public spending over the parliament spoke out saying that a 1% real terms increase for the NHS would mean cuts in social care, which themselves would affect the NHS:

"If this goes ahead [1% real terms increase in funding] they will hollow out social care to such a degree that the NHS will not be able to function anyway, because it will not be able to discharge people from hospital. If they persist with this councils will tighten their eligibility criteria even further for social care. There will be barely nothing left in some parts of the country, and individuals will be digging ever deeper into their own pockets for social care support."

Of course, we know that Osborne did not deliver 1% real terms increases, he delivered flat funding (just like Darling would have), so Burnham's quote is not relevant. However, I believe this is the source of the Conservative attacks that "Labour would have cut the NHS".

It is about time Labour put the record straight about their post-election plans for NHS funding and force the Tories to stop misleading the public.