"The NHS will last as long as there are folk left with the faith to fight for it"
Aneurin Bevan

Thursday, 17 March 2011

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.


  1. Yawn, a couple of % here and there and you think you have an argument. Meanwhile in reality the overall economy is the most important thing and the "Labour is right and Tories always wrong" mong isn't seeing the complete picture.

    I guess your the kind of guy who can always find a way of spending money, taxing somebody but absolutely no idea how to make it. Thats somebody elses issue; your only concern is how to take your fair share because its sooooooo unfair.

    What makes me laugh though is your pathetic existence. You have to devote so much time to fight the Toreeez when the alternative you offer is a bunch of clowns that knocked even more of the manufacturing base of the UK than the Toreeez ever did and near crippled us. What kind of pillllock are you?

  2. You'll find everything I wrote is correct. Look them up.

  3. I agree with this totally, something I said before the last electtion would happen.....I just now wish that the anonymous messager above would come clean and own up who he/she/they are/is..... Obviously a Cameron Club member...

  4. If we don't sort out the disastrous finances left by your labour mates we will end up in the same situation as Ireland. Will your comrades in the unions take 10% pay cuts to fix things.

  5. Hmm, since most union members are low paid, are you suggesting that the least off should pay for the greed of the financial sector? Hardly boosting Dave's progressive credentials, eh?

    Ermmm, Ireland is in the state it is in because they cut too deep and too fast, and what is Osborne doing? Oh yes, too deep, too fast.

  6. To quote from your blog:

    In the 2010/11 Operating Framework, Burnham said that the NHS would have to make the £15-20bn "efficiency savings" over four 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.

    So the truth is both Labour and Conservatives see the need for large savings/efficiences otherwise the NHS will swallow up an increasingly large and unaffordable % of GDP in the future.
    Why try to make political points over small differences.
    It strikes me that NHS spending/structure issues are too difficult an issue to be left to politicians who are often here today and gone tomorrow and who seek short term popularity by putting off difficult but necessary decisions.
    A non political body in my view should be tasked to study and recommend a number of alternative ways forward for the NHS structure/funding. It should draw on best practice in other advanced countries.