After four years of austerity, the NHS funding crisis is becoming impossible for the government to disguise. More than one in three trusts (58) are now running a deficit, compared to just one in ten (16) before the coalition entered office. Meanwhile, the BBC reports today that health service faces a funding gap of up to £2bn next year as its budget is burst by rising demand.
All of this was entirely predictable. Contrary to the conventional view that it has been shielded from austerity, the NHS is currently enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the current parliament it will rise by an average of just 0.5 per cent. Consequently, in the words of a recent Social Market Foundation paper, there has been “an effective cut of £16bn from the health budget in terms of what patients expect the NHS to deliver”. Should the NHS receive flat real-terms settlements for the three years from 2015-16, this cut will increase to £34bn or 23 per cent.
If the health service, the most popular spending area among the public (71 per cent believe that its budget should be increased and just 5 per cent that it should be reduced) is to survive in anything like its present form, the question of new funding can no longer be deferred. Jeremy Hunt is involved in talks on additional funding for the next financial year (potentially to be announced in George Osborne’s pre-election Budget) but this will only be a sticking-plaster solution at best.
If they wish to avoid a significant fall in the quality and quantity of services, this government and future ones are left with three choices: to significantly raise taxes, to cut spending elsewhere, or to impose patient charges. The third of these is proposed today by the Royal College of Nursing, which calls for a £10 fee for patients to see their GP. If this seems heretical, it’s worth remembering that our free health service hasn’t been truly free since Labour chancellor Hugh Gaitskell introduced prescription charges for glasses and dentures in his 1951 Budget (although they have now been abolished in Scotland, Wales and Northern Ireland). But unsurprisingly, the Department of Health has responded by dismissing the idea out of hand: “We are absolutely clear that the NHS should be free at the point of use, and we will not charge for GP appointments.” Labour, needless to say, takes the same view.
The most concrete suggestion on how to solve the crisis has come from Labour’s Frank Field, who has called for a 1 per cent rise in National Insurance, comparable to that introducd by Gordon Brown in 2002, with the additional funds put into a dedicated fund that would be run as a mutual. But after spending much of the last year warning of a “cost-of-living-crisis”, senior Labour figures, most notably Ed Balls, are doubtful that the party can afford to go into the general election pledging to raise general taxation. In an attempt to start a political bidding war, I’m told by Field that he will shortly meet with Hunt to try and sell the idea to the Tories. But all the signs are that David Cameron and George Osborne intend to run a classic 1992-style campaign in which they pledge to clear the remainder of the deficit through spending cuts alone and denounce Labour’s “tax bombshell”.
But unless the parties are soon willing to confront voters with the truth that if they want the NHS to survive, they will have to pay for it (that is to say, they cannot enjoy Nordic-style services on US-style tax rates), the health service, rated by a new US study as the best in the world, will be condemned to years of dangerous decline.
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