“Over the course of this Parliament, the government will spend over half a trillion pounds on the health service – an unprecedented level of investment.”
Treasury statement, 24 November 2015
The government has set out how much it plans to spend on the health service over this parliament.
The Treasury made it sound like a historically generous settlement: “The Spending Review announcement means that over the course of this Parliament, the government will spend over half a trillion pounds on the health service – an unprecedented level of investment.”
But health think-tanks quickly hit back – with an almost diametrically opposite take on the situation. The King’s Fund said: “The NHS and social care are now locked into a decade-long funding squeeze which will see the largest sustained falls in spending as a share of GDP on both services in modern times.”
Here’s what George Osborne has promised to spend on the NHS in England, in billions:
Yes, the figures for 2016/17 to 2020/21 do add up to more than £500bn over five years in cash.
You could call it “unprecedented”, but since we generally expect healthcare spending to rise year-on-year and the value of money to fall, that’s not a surprise (FactCheck just paid an unprecedented amount for a book of stamps).
In fairness, if we factor in inflation, this is still a real-terms rise, and it more than meets Mr Osborne’s election pledge to spend £8bn a year more above inflation by 2020.
But hang on a minute…
The Chancellor giveth and he taketh away
Charities and healthcare think-tanks are pointing out that the increase isn’t as generous as it appears if you use a broader definition of health spending than the chancellor.
The figures above are for the NHS England budget alone. But that’s just part of the wider Department of Health Budget.
The other part isn’t all spent on paperclips. It includes things like clinical training programmes and public health campaigns. And the non-NHS England slice (in light pink here) is being cut:
Nuffield Trust chief executive Nigel Edwards said: “The Treasury’s figures show it actually represents a £1.5bn cut in a single year to budgets that include training for doctors and nurses, and important preventive measures like stop smoking services and programmes to combat obesity.”
The Health Foundation’s chief economist Anita Charlesworth said: “The wider health budget faces a real terms reduction of over 20 per cent between 2015/16 and 2020/21.
“This includes other vital areas of NHS care – junior doctor training, health visiting, sexual health and vaccinations. The Chancellor has given with one hand and taken away with the other.”
So there’s extra money with one hand and a cut with the other. But how does it all even out in the end?
With a very small above-inflation rise in funding for the total health budget – an average of 0.9 per cent a year, over this parliament, according to the Health Foundation:
That’s exactly the same increase that we saw under the coalition in the last parliament – and that was the smallest increase in NHS spending in any parliament on record.
To put things into historical context, Labour government raised health spending by 5.7 per cent a year on average between 1997/8 and 2009/10, and the average annual increase was 3.2 per cent under the Conservatives between 1979/80 and 1996/7, according to the King’s Fund:
How much per head?
The population is growing, so how much will be spent on health per head over this parliament?
The annual increase is now only 0.1 per cent in real terms, says the Health Foundation. Again, that’s exactly the same rate of growth per capita as in the last parliament.
How much of our wealth do we spend on health?
Rather than getting hung up on billions and trillions, healthcare experts often prefer to talk about the share of GDP that countries spend on health.
After all, the economy is forecast to grow over the next five years. What slice of this wealth will the government choose to allocate to public healthcare?
A shrinking slice, this week’s figures suggest. The Health Foundation has overall health spending falling from 7.3 per cent in 2015/16 to 6.7 per cent of GDP in 2020/21:
This is one way of getting an angle on how much the NHS costs us compared to systems in other developed countries.
The methodology used to calculate the percentage of GDP differs between different organisations, but the OECD group of advanced economies has the UK already spending a smaller share of GDP than the average member-state.
Going back to the government’s claim, it’s perfectly true that George Osborne will spend over half a trillion pounds on NHS England this parliament.
But whether that really represents an “unprecedented level of investment” is hotly disputed by experts.
Mr Osborne promised to “protect the NHS budget” from cuts before the general election. Now it’s clear that he had a narrow definition in mind, one that does not include all healthcare spending.
In the long term, this Conservative administration – along with the previous coalition government – is actually presiding over historically low real-terms increases in spending.
And the rising population means spending per head barely rises at all, according to the Health Foundation.
In fact, on several measures, the settlement for this parliament is pretty much the same as the one the health service got under the coalition.
On the other hand, Mr Osborne can claim to have more than kept his promise to spend £8bn a year above inflation on NHS England by 2020.
Lest we forget – that is more than what any other party pledged to spend on the NHS before the last election.