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General election 2017: who will be most generous to the NHS?

Posted on 9/06/2017 by David Burgess

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You might think that comparing the parties’ offers on the funding of the NHS would be a straightforward job. Surely nothing more than a little arithmetic, based on pounds, pence and growth rates.

Alas no. Though everyone promises more money, the parties start (and finish) counting the extra money from different years, include different elements of health spending and use different methodologies to tot up the numbers. I will try to set out the key measures of what the parties have offered, based on their headline manifesto commitments combined with public and private clarifications to fill in some of the gaps. Taking them in the order in which they were released.

Labour

Labour’s manifesto headline is to provide £30 billion more than current (Conservative) plans over five years, or £6 billion a year. This covers all revenue spending on health (ie, includes the NHS, public health, training etc). Of this, some £3 billion will be used to re-instate bursaries for nurses, leaving £27 billion for other services or £5.4 billion a year. Labour has also referred to providing £40 billion over five years – this is the £30 billion plus a further £10 billion for capital spending, or £8 billion a year.

Labour plans to re-open current 2017/18 spending plans, providing an immediate in-year boost to health spending. However, as they have made a five-year commitment starting in 2017/18, it runs out in 2021/22 – ie, before the end of the next parliament. Also, as it is phrased as ‘more than’ the current plan, strictly speaking it becomes tricky in 2021/22, when there is no current plan (the 2015 Spending Review settlement runs out in 2020/21). The Labour Party also intends to end the current pay restraint, which will have to come out of the £27 billion (as each 1 per cent added to pay will cost around £500 million if given to all staff, this soon mounts if applied every year).

Liberal Democrats

The Liberal Democrats’ headline manifesto number is £6 billion more than current plans for health and social care in 2019/20. This is meant to plug the funding gap until two other manifesto commitments kick in: developing a dedicated Health and Care Tax and using the findings from a cross-party convention to review the longer-term finances. As some £2 billion of the £6 billion is meant for social care, this would leave £4 billion for the NHS itself. This pledge also represents an early boost to the NHS, but starting in 2018/19 rather than 2017/18 (one year after Labour).

Most LibDem pledges also focus on 2019/20, the year their tax and spending plans reach their full effect. However, aside from the (many) details – including how income tax increases generate in the UK and how much of that comes to the English NHS – the £4 billion excludes capital spending, which is pencilled in for another £10 billion over the five years. It also excludes the unwinding of pay restraint, the costs of which are likely to be more than £1 billion a year by 2019/20 and will be on top of the £4 billion (rather than coming from it, as with Labour). Like Labour, the LibDems plan to reinstate bursaries for nurses (costed at £488 million a year in 2019/20 and rising after that) and also intend to reverse the cuts to public health spending (at a cost of £90 million a year in 2019/20). These are also additional to the £6billion (for health and care) or £4 billion (just health in England).

Though the LibDems aim for a long-term solution to funding, if there is none, overall spending is pencilled in to increase by 2 per cent in real terms after 2020/21 in line with expected economic growth.

Conservatives

Lastly, the Conservatives manifesto headline is £8 billion more in real terms (ie, unlike Labour and the LibDems, it explicitly protects against inflation) in 2022/23 than is planned in 2017/18. This refers to NHS England spending only and therefore excludes public health, training and other Department of Health budgets – which were cut when this definition of spending was used in the last Spending Review. However, the Prime Minister also committed to an additional £10 billion in capital spending, although – as recommended by the Naylor report on NHS property and estates – not all of this will necessarily come from the taxpayer.

How current spending is increased year by year up to 2022/23 is not stated other than to promise real-terms growth per capita in NHS England budgets. This would result in a boost to spending plans for 2018/19 and 2019/20. As the Conservatives do not plan to reverse the end of bursaries for nurse training, or end pay restraint, neither are relevant in their case, at least if looking at overall spending.

Conclusion

So who will be most generous? On capital spending, everyone is quoting £10 billion so any differences are either in the phasing by year or the source of the funding (taxpayer, land sales or some other new funding mechanism) rather than in the overall sum itself.

On revenue spending, while flat profiles (such as an extra £8 billion in cash a year) may look odd, on the evidence available to us, the Labour offer looks the most generous, certainly in the early years. However, as the years go by, the Liberal Democrats’ approach of adding the impact of additional pay rises and bursaries to the health settlement will erode this lead (unless Labour alters its profile of spending growth) and, of course, the long-term settlement they aim for may also change the assessment by the end of the parliament. As such, they could argue that they have both put forward a short-term plan and made clear they intend to follow this with a long-term plan. The Conservatives’ offer is perhaps the most straightforward, although questions should be asked about plans for non-protected spending and about the profile of the growth. Even so, as the Conservatives presumably do not plan to provide all the uplift early on in the parliament, Labour and the LibDems offer more in the early years and may also do so in the later years.

And for the next election, it would help everyone if comparing the offers from different parties did not require a spreadsheet. The proposals from Labour and the LibDems for an Office of Budget Responsibility-style organisation for health and care would go some way to providing the transparency that is needed.

Source: KingsFund