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Cameron’s NHS “ringfence” makes Thatcher’s increases look generous

David Cameron claims that NHS funding is ringfenced and will increase in real terms. He's wrong on both counts.

David Cameron claims that NHS funding is ringfenced and will increase in real terms. But even if we take government figures at face value, NHS spending is set to grow at a slower rate than during the Thatcher years of chronic underinvestment and lengthening waiting times.

The House of Commons provides tables of NHS expenditure (Table 2, pdf). The graph below shows the real terms funding of the NHS in England between 1975 and 2015 – both actual funding and the planned funding in chancellor George Osborne's October 2010 Spending Review. Spending has been adjusted to account for inflation, and is expressed in 2009/10 prices.

NHS net expenditure

There are three trends, highlighted with red dashed lines. The first trend, up until 1998, shows real terms increases of around £1bn a year. This was the Thatcher/Major years and those of us who were patients or worked in the NHS during this time will remember the long waiting lists, lack of investment and understaffing that lead to demoralised staff.

The Blair government was elected in 1997 on a mandate to raise NHS funding and we can see this in the second trend between 1998 and 2010. The Blair/Brown years saw NHS funding raised by an average of £4.8bn a year. This money paid for the investment in new hospitals and equipment. This money also paid for bringing down waiting times (to eight weeks in May 2010), which required employing more staff: between 1997 and 2010 the number of doctors increased by 57% and nurses by 31%.

Working conditions and pay improved too, leading to more motivated staff. Over the last decade the activity of the NHS has increased by almost 40% to 16.8m treatments (or "finished consultant episodes" – see pdf) in 2009/10.

The third trend is the Cameron years: effectively real terms flat funding. (What the government claims is a real increase amounts to a mere £24 million a year, according to King's Fund Chief Economist Prof John Appleby.) Sir David Nicholson, Chief Executive of the NHS, pointed out in a recent interview with the BBC that four years of flat funding has never occurred in the NHS, so this is a policy with unknown consequences.

As for ringfencing, in his October Spending Review the chancellor announced that almost £1bn a year would be taken from the NHS budget and used to fund social care. Further, the Operating Framework 2011/12 (the rule book for the NHS) says that primary care trust allocations will be reduced by 2% to pay for health secretary Andrew Lansley's reorganisation. These are cuts because they take NHS funding that would have otherwise been used for care.

The truth is that spending on NHS health care is neither ringfenced nor increasing.

Richard Blogger writes about the NHS and social policy at NHS Vault.

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