This week, Theresa May announced a cash boost for the NHS that will see the service £20 billion a year better off by 2023. She suggested it was a ‘Brexit dividend’, a claim we FactChecked on Monday.
It comes after years of austerity across the public sector, including in health budgets, under a range of Conservative-led governments.
But Mrs May’s administration says the government’s new ten-year plan “secures the NHS’s future.”
So how generous have the Conservatives been this week – and how does this look in context?
Where’s the money going?
The extra cash will go to the NHS in England, with knock-on increases in healthcare funding for Scotland, Wales and Northern Ireland courtesy of the Barnett formula. The Scottish government will get an extra £2 billion as a result of the announcement.
But as many have pointed out, this week’s announcement doesn’t cover ‘capital’ spending on things like training doctors and building hospitals.
And it does little to help other areas of the health sector that have direct and indirect effects on the NHS – most notably, the money won’t be going on social care.
Theresa May said the government will present plans for social care at the next spending review, scheduled for 2019.
It’s also worth saying that for now, we only know about what’s happening to the NHS England budget, which will rise on average by 3.4 per cent a year.
The Institute for Fiscal Studies explained to us that we don’t know what will happen to the wider Department of Health budget (of which NHS spending makes up 88 per cent).
If the rest of the departmental budget is frozen, this week’s announcement will see health spending rise by 3.0 per cent a year in real terms.
(By the way, all the figures in this article are in real terms, i.e. accounting for inflation, unless otherwise stated.)
How does this announcement compare to Labour’s health spending record?
Healthcare spending rose in real terms every year that Labour was in government, except for 2009 and 2010 – that’s 12 out of 14 years.
Over the course of their time in office, we estimate that the average annual growth rate in healthcare spending under Labour was 5.6 per cent – even accounting for inflation.
Since 2010, annual growth in the health budget has been significantly slower than it was under most of Labour’s time in office. The IFS says: “UK public health spending grew in real terms by an average of 1.3 per cent per year between 2009-10 and 2015-16.”
This doesn’t just put the Conservatives below Labour’s average spend – the IFS point out that this is “substantially below” the long-term trend growth between 1955 and 2016, when health budgets grew by 4.1 per cent a year on average.
The early years of the Coalition government were the most austere in terms of health spending, but began to pick up slightly after 2013.
How does the Conservatives’ record compare?
The problem for the Conservatives is that this week’s cash boost comes after eight years of extremely slow growth. To understand how much catching up they have left to do, let’s conduct a quick thought experiment.
The graph below shows how the healthcare budget has grown since 2010. It’s an indexed graph, which means that every measure begins at 100. It shows us relative growth rather than absolute numbers.
The blue line shows what’s happened in the real world since the Conservatives took office.
Figures from 2019-20 onwards show what the government’s most recent announcement will do for healthcare budgets. You can see it’s a definite acceleration in growth compared to previous years under the Coalition and Cameron/May administrations.
The orange line shows what would have happened if healthcare budgets had grown in line with the long-term average annual increase they’ve enjoyed since 1955 (about 4.1 per cent a year).
The red line shows what would have happened if growth in healthcare budgets had kept pace with the average annual increase they experienced under Labour (by our calculations, about 5.6 per cent a year).
While this week’s announcement is better than nothing for many healthcare providers and experts, it’s still a long way from undoing the years of austerity that the health service has faced.
To be fair to the government, though, it’s not clear whether Labour’s average budget boost of 5.6 per cent a year would have been sustainable in the long term.
Indeed, the final two years of Labour rule saw significant tightening compared to what had gone before as the financial crisis put the deficit under the spotlight.
The government’s announcement of an extra cash injection for the NHS should see the health budget grow by 3 per cent a year on average – much higher than it has been since 2010.
However, this is still significantly lower than the average growth we saw under the last Labour government (we estimate 5.6 per cent a year in real terms). It is also lower than the long-term average growth rate that health budgets have enjoyed since the mid 1950s (4.1 per cent a year).
While extra cash has been welcomed by many, the government has a long way to go before it undoes the cumulative effect of years of healthcare austerity.