Earlier this week, Chancellor of the Exchequer Philip Hammond took centre stage in the House of Commons.
Unlike previous performances, Hammond ditched the famous red box and red carpet roll-out. Instead he kept things simple – offering a ‘statement’ on how the UK economy has been performing. It comes at a challenging time for the Conservative Party, given their somewhat tumultuous start to 2018 – with frontbench Tory MPs openly disputing Brexit and the Labour Party still challenging the Government in the polls.
On Tuesday, Hammond offered up some positive news – signalling that austerity is likely to be eased, debt is finally forecast to start falling next year, and net borrowing is on track to meet the Government’s target of no more than 2 percent of national income by 2020-21. This could pave the way for additional public spending – particularly on the NHS, which has struggled under the fiscally prudent plans of the current Government.
The Office for Budget Responsibility (OBR) has been, perhaps expectantly given its position as a Government watchdog, a little more cautious in its latest assessment of the economy. They have outlined that economic growth is still forecast to leave the UK near the bottom of the G7/G20 growth leagues, and that Brexit is likely to cost the UK billions for years to come. As such, the implication here is that the UK will actually struggle to find additional funding for the NHS – and certainly not the extra £350 million a week which was promised during the referendum campaign!
For those working with, and for the NHS, such contrasting assessments of the UK economy offers little respite from the instability, and uncertainty, that currently plagues their day-to-day existence. Whilst Hammond recognises the need for the NHS to receive extra support, the Government doesn’t have the financial capacity nor the resources on the ground to do anything about it right now within the parameters of its current economic plan – as such, it is certainly feeling the pressures of this classic zero-sum game.
It is important to recognise, too, that the current furore that exists over NHS spending hasn’t suddenly appeared overnight. Attitudes have hardened, and voices have amplified, in response to events over time. Since 2015, the UK has seen some of the smallest healthcare budget increases since the introduction of the NHS, with budget growth floating around the 1 percent mark, rather than the historic 4 percent average – and this is all at a time where pressure on the healthcare system is at its highest.
To add to this, the Conservative Government in 2012 introduced a ‘Health and Social Care Act’, which saw budgetary responsibility for public health spending devolve from central government to local authorities. Since then, local authorities have faced public health budget cuts – despite having had to meet the same, if not broadened, standards of care. In fact, the Government’s most recent plans, will see local authority public health budgets stripped away by 2020/21, as the ‘ring-fenced’ public health grant will be replaced by a more regionally focused income generating ‘business retention rate’ model. Critics argue that this decision is likely to worsen health inequalities between regions in the UK.
The Government is doing its best to mask all of this. They suggest that £4 billion will be “going into the NHS in 2018/19 alone”, but it’s important to note that £1.6 billion of this is not frontline – with almost half going to cover capital estates and infrastructure.
Politically, this has paved the way for criticism from opposition party members, and even senior officials within the civil service. Take for example Labour Party leader Jeremy Corbyn, who in the Commons, stated that “The NHS is clearly in crisis, so why was there not a penny extra for it in the yesterday’s statement by the Chancellor?” He also went on to highlight a report from the National Audit Office (NAO), which found that “NHS funding will fall by 0.3 percent in 2019” – contradicting figures stated by the Chancellor.
Others, such as Liberal Democrat leader Vince Cable, recently argued that increasing taxes was one way of paying for NHS services. Cable’s idea seems feasible in practice, given the UK Government has discussed the impact of a hypothecated tax. Cable has also called for a clamping down on tax avoidance, although he is not alone there. The Government would claim to have done a lot in this area already, and appear to have rolling public consultations on addressing tax avoidance by large multinationals. However, given the EU is taking horizontal measures to tackle tax avoidance, as are the OECD, it is far from clear how much additional tax this will raise, and when it might arise. For the NHS, this uncertainty offers no short term solution, and therefore doesn’t address the immediate challenges the healthcare system faces.
Whilst Hammond mentioned that the Autumn statement would be the time to discuss budgets and funding commitments, he once again failed to confront the challenges facing healthcare head on – offering indications that spending will increase, but providing no foundation or basis as to how this would be achieved.
The NHS is most-valued across the political spectrum, but it’s clear that the current economic and political climate, diverts both funding and attention away from the under-resourced public service. Whilst there is ambition being shown to address the NHS ‘crisis’, it’s unlikely things will change soon, and this is likely to leave the Conservative Government politically exposed to criticism on healthcare in the immediate future.