Labour's NHS Funding

The Government tries to justify its funding for the NHS by saying that they are spending more than Labour would. Worse, the Government claims that if they had won the 2010 general election Labour would have cut the NHS budget. There is no evidence at all of this, and the government knows this. However, in parliament the Secretary of State for Health, Andrew Lansley, propagated this untruth:

"We know exactly what Labour would do if they were in charge of the NHS: they would cut it. We have not cut it and are going to protect it."

Later in the debate the Minister of State, Paul Burstow made the same allegation:

"The purpose of the motion is very clear. It is nothing to do with listening; it is all about scaremongering, opportunism and grandstanding, and the House should throw it out. We will continue to listen and to improve the Bill, but we will not do it by listening to Labour Members, who have no interest in making the NHS better and who would have cut it, had they had the opportunity to do so in government."

So is there any evidence for this, or are these ministers propagating an untruth in Parliament?

The March 2010 budget, the last budget of Alistair Darling, said:
6.13 In the 2009 Pre-Budget Report the Government made a clear commitment to protect key frontline public service priorities in 2011-12 and 2012-13 and announced that:
  • NHS frontline spending – the 95 per cent of near-cash funding that supports patient care – will rise in line with inflation;
This says that under Labour, for the two financial years 2011/12 and 2012/13, NHS funding would rise with inflation. In real terms this is flat funding. This is exactly the same as Osborne's allocation in the October 2010 Spending Review. Indeed, Sir David Nicholson (the chief executive of the NHS) has acknowledged that the NHS will receive flat funding. In an interview with the BBC, Sir David said:

"The settlement was generous when you look across the rest of the public service. [But] there has never been a time where we have had four years of flat real growth. It is unprecedented."

So basically, the Darling budget and the Osborne budget give the NHS the same amount. There is no evidence in Darling's budget of Labour intending to cut the NHS.

Then there is the "efficiency savings" issue. In the 2010/11 Operating Framework, Burnham said that the NHS would have to make the £15-20bn "efficiency savings" over four years. These "efficiency savings" were identified by McKinsey although it is quite clear that neither McKinsey, nor the NHS, know where these "savings" will come from.

An "efficiency saving" is a cut because it says "you will be expected to do more with less, so we will give you less". Do not accept the confused statements that the "efficiency savings" will be "re-invested" because since there is flat funding there is no new money to re-invest.

The Labour "efficiency savings" work out as between £3.8bn and £5bn a year for each of four years. Every attempt in the past for government departments to make "efficiency savings" has failed to reach the target, so at best, the "efficiency savings" achieved under Labour would have been at the low end, £3.8bn a year. When Lansley took over the NHS the "efficiency savings" morphed into £20bn over five years and this works out as £4bn a year for each of the five years.

Now bear in mind that the reorganisation of the NHS will cost £1.7bn (the Government's figures) or £2-3bn (Manchester Business School) or £20bn (Civitas) and that funding for these costs will come from the NHS budget that should be used for healthcare. It is clear that the NHS budget is being re-allocated from healthcare to the re-organisation costs and hence they are a cut in healthcare funding.

So given all of these figures it is clear that the Conservatives will spend less on healthcare than Labour would have and the Conservatives have to cut healthcare to pay for the re-organisation.

It is clear that Labour would not cut the NHS, indeed, it is clear that their plans for NHS funding were more generous than Osborne allocated. So where does this idea that "Labour would have cut the NHS" come from?

The only reference seems to come from last June. Andy Burnham misinterpreted Cameron's pledge to "ringfence the NHS". Burnham (and, I suspect, most of the public) thought that would mean that the NHS would continue to get the real terms increases that is has had for the last 30 years. The Guardian reported this in July 2010:
He said he assumed the Conservative commitment on the spending would lead to extra NHS expenditure, amounting to more than 1% a year, coming to more than £4bn over the parliament, which would mean even larger reductions for schools and local government.
Burnham, fully knowing that Osborne was intending to cut £80bn of public spending over the parliament spoke out saying that a 1% real terms increase for the NHS would mean cuts in social care, which themselves would affect the NHS:
"If this goes ahead [1% real terms increase in funding] they will hollow out social care to such a degree that the NHS will not be able to function anyway, because it will not be able to discharge people from hospital. If they persist with this councils will tighten their eligibility criteria even further for social care. There will be barely nothing left in some parts of the country, and individuals will be digging ever deeper into their own pockets for social care support."
Of course, we know that Osborne did not deliver 1% real terms increases, he delivered flat funding (just like Darling would have), so Burnham's quote is not relevant. However, I believe this is the source of the Conservative attacks that "Labour would have cut the NHS".