150222 Health spending
  • Up, up… However you want to look at health spending, all of the trends go upwards. In real terms, accounting for inflation, it’s gone from £38.5 billion to £132.3 billion over the past 30 years. As a proportion of all public spending, it’s gone from 10.2 per cent to 18.1 per cent. As a proportion of all public spending minus debt interest and social security – what we might call “public service spending” – it’s gone from 15.5 to 28.4 per cent. By way of comparison, education has gained only three percentage points as a proportion of public service spending. Defence has declined, natch.
  • …and away. All three main parties are promising to protect the Department of Health from cuts after the election – and then some. The Conservatives want to give an extra £2 billion a year on top of inflation. Labour want to give an extra £2.5 billion a year on top of the Conservatives’ plans. And the Lib Dems want to start off by giving an extra £1 billion a year on top of the Conservatives’ plans, and end up giving at least an extra £8 billion a year on top of inflation. Goddit?
  • Under pressure. There’s politics in those spending plans, of course, but the parties would say that there’s also good practice. One reason to keep increasing health spending is that there’s a lot of pressure to do so, whether it’s from an ageing population, the higher costs of new treatments, or the spread of illnesses such as diabetes. This is why NHS England talks of a “mismatch between resources and patient needs of nearly £30 billion a year by 2020/21.” They reckon that £22 billion of that can be written off by improved productivity. The remaining £8 billion is basically what the parties are scrabbling over.
  • Bigger slice, smaller cake. The current increases in health spending don’t match the largesse of the Labour years – but they’re still generous compared to other departments. By the calculations in the Institute for Fiscal Studies’ latest Green Budget, the Department of Health’s budget is set to increase by 6.2 per cent, in real terms, over the five years to 2015-16. For all the other departments, the average outcome is a cut of 15.3 per cent. This is the main problem with NHS England’s demand for an extra £8 billion, even if we take that figure at face value: it denies others that cash. If they get their way, other departments would face average cuts of about 6.1 per cent over the next Parliament.
  • When and how does it stop? Health spending already accounts for 18 per cent of all public spending, and yet the parties are straining to find new ways to increase it – with one exception. As the IFS puts it in one of the most resonant passages of their Green Budget:

“One way of increasing NHS spending without increasing the pressure on the public finances or other government departments would be to increase NHS funding from private sources – for example, by increasing existing charges or introducing new charges for some NHS services. The UK is unusual in an international context in that such a large proportion of total health spending is financed from public sources (84 per cent in 2012). However, while increasing income from private sources could be one way of boosting the NHS’s finances, it is not being proposed by any of the main UK political parties.”

Increasing income from private sources? That’s the sort of privatisation that Parliament should be discussing.