Inflation forecasts in yesterday’s budget show Department of Health funding will drop by £857m in real terms next year compared with planned 2010-11spending set out in October.
King’s Fund chief economist John Appleby told HSJ today that, measured against the “baseline” Department of Health Budget of £103.8bn for 2010-11 in October’s spending review, the new inflation forecasts implied a real terms cut of £910m for the health service by 2014-15.
But yesterday’s budget book also contained a new projected DH spend figure of £102.9bn – £900m lower than the October figure.
An Institute of Fiscal Studies briefing published today said based on the new, lower figure, NHS spending will stay flat in real terms next year, fall by 0.1 per cent in 2012-13, stay flat in 2013-14, and rise by 0.1 per cent in 2014-15.
The figures will raise questions about the basis of the government’s NHS spending pledge.
Asked by HSJ which of the two figures the Treasury was using as its baseline to measure the commitment to real terms spending increases, a Treasury spokesperson said: “We haven’t changed the baseline. The number published in the budget, like all other departments, is the department’s own estimated out-turn given that we’re near the end of the financial year.
“We have been very clear about our commitment. NHS spending will rise every year in real terms.”
Shadow health secretary John Healey said: “The small print of the Budget confirms that David Cameron is letting the NHS down, and has broken his promise to protect the NHS.
“With the Office for Budget Responsibility’s new inflation forecasts, NHS England is in fact facing a real terms cut of £1bn.”
A Department of Health spokeswoman said the £900m underspend would not be lost to the NHS. She said £300m related to an underspend by the service which the department would have to find out of its own budgets in future years.
The other £600m covered a DH capital budget underspend which did not affect the NHS budget, she added.