Has the evil Treasury swiped £2.8bn from the NHS’s 2010-11 baseline?

There’s lots of chatter in Parliament and the blogosphere that it may have, with shadow health secretary John Healey today writing to Andrew Lansley for an explanation.

The source of conspiracy theory is that yesterday’s Spending Review document gave £98.7bn as the NHS’s baseline resource funding for 2010-11 (HMT, October 2010, p43) where as the figure given for the Department of Health resource allocation in the June budget was £101.5bn (HMT June 2010, p43).

So, has the £2.8bn been clawed back? The NHS has an almost guilty complex about such claw backs, as it is hoping politicians wont have realised their “real terms” pledge is loosely enough phrased to make a raid on last year’s £1.4bn surplus - not to mention the £3bn foundation trust accumulated cash pile - worth a try.

However the short answer for the time poor is: it probably hasn’t.

Not that it isn’t something we’d put past them. Indeed, a source at the Treasury initially told us yesterday they assumed this was precisely what they had done. After a double-check though, they back-tracked.

The explanation seems to be this:

For reasons best known to themselves, the Treasury changed the format of the Budget tables between June and yesterday.

We’ve got used to seeing the DH’s allocation set out in two parts in Budget reports. One bigger figure described the DH’s total allocation – £101.5bn for resource spending in the June Budget –  and then below that an italicised line would set out what of the total was for NHS England.

The bulk of the difference was made up by DH grants to local authorities for social care.

In June, the “of which NHS England” line in the resource budget was £99.5bn. That is the figure against which yesterday’s single £98.7bn line for the resource budget needs to be compared.

But the £98.7bn excludes depreciation (funny money charges which spread the cost of capital consumption over the relevant asset’s useful life).

Adding that back in gets you to £99.8bn – as shown on p86 of the Spending Review.

That leaves us with a missing £1.7bn to get back up to the June Department of Health £101.5bn line.

£131m of that is accounted for as the budget for the Food Standards Agency, which is now detailed separately on page 88 of the Spending Review (that gets an 18 per cent cash cut over the period).

A further £1.3bn is the DH’s Personal Social Services grant to local authorities – p44 of the Spending Review

I make that £101.231bn. That’s still £269m shy of the £101.5bn (the Treasury is getting back to us…) but that pales in comparison to the social care trick.

That’s where the real conspiracy of this Spending Review seems to be: £1bn of the NHS’s capital budget has been transfered to its revenue budget (“borrowing only to invest”, anyone?) and is now ear-marked for social care spending.

Taking that £1bn out of the NHS budget reverses the modest 0.4 per cent real terms increase over the four year period into a 0.6 per cent real terms cut.

Of course social care spending benefits the NHS. But only if it’s additional. With local government being cut by 26 per cent over the period, the thing to watch will be what councils do with their existing social care funds (the £1.3bn from the DH in 2010 is going to increase to £2.4bn in 2014-15, but it isn’t ring fenced).

If the NHS’s capital gets used in place of previous spending now diverted elsewhere the net impact on the front line of the NHS will be even worse.

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