Theresa May is poised to increase the NHS’s budget by up to £6bn a year in a bid to capitalise on its impending 70th birthday and rescue the beleaguered service’s faltering fortunes.
The prime minister will scrap the eight-year-long policy of limiting the NHS to funding rises of only 1% and, in a dramatic shift, hand it increases of between 3% and 4% for the next few years.
The official announcement of a move that could see the NHS’s budget go up by around £20bn by the end of this parliament is expected within days. May is preparing to confirm the news herself, possibly through a television interview on Sunday, or at an event on Monday.
The full details of what the funding package will involve are still unclear, but newspaper reports on Thursday evening said that the annual increase would be worth anything between £4bn and £6bn. It will be paid for through a combination of increased taxes and higher borrowing. Ministers have ruled out introducing a new dedicated, or hypothecated, tax specifically to fund the NHS, despite evidence that this is the public’s preferred way of ploughing more money into it.
It comes after weeks of sometimes tense negotiations between May, Jeremy Hunt, the health and social care secretary, and Philip Hammond, the chancellor, over how much the NHS needed and how much extra the country could afford, given the uncertain economic outlook. Hunt, who has been arguing for as close to 4% rises as possible, told a conference of NHS bosses in Manchester on Thursday that the discussions about how much the NHS would receive “are difficult, they are ongoing.” Hammond initially sought to ensure that it got no more than 2.5% but May appears to have been persuaded by Hunt’s lobbying, who warned her that the continued deterioration of the NHS – which is beset by serious understaffing, overstretched services, an inability to meet key treatment waiting times and falling public satisfaction – could prove damaging for the Tories.
Anything less than 4% a year will disappoint, and risk being criticised as not enough by Simon Stevens, the chief executive of NHS England, as well as organisations representing NHS providers of care, doctors groups, economists, thinktanks and health charities. Stevens has publicly backed 4% as the minimum increase the service needs after receiving annual rises averaging just over 1% since the coalition government introduced an austerity programme across the public sector in 2010. Influential bodies such as the Institute for Fiscal Studies and Office for Budgetary Responsibility have also endorsed the 4% figure, with some experts arguing for 5% rises.
The NHS is in the longest period of constrained funding growth it has experienced since its creation in 1948 and that has coincided with a sharp rise in demand for many types of care linked to the ageing and growing population and increase in lifestyle-related chronic diseases. Until 2010 it had historically received budget uplifts averaging 3.7% a year. In recent years many hospitals in England have overspent, by up to £100m a year, as they tried to balance their books.
May will say that the deal represents her delivering on the commitment she made to MPs in late March to bring forward a long-term funding deal for the NHS, which she recognised could not go on being given small annual rises followed by injections of emergency extra cash.
May’s conversion to the necessity of giving the NHS what Hunt called “a significant increase in resources” in a Guardian interview last week is remarkable and may indicate anxiety about the potential political damage to the government if the NHS’s struggle to cope continued.
The exact percentage, date when the extra money will start arriving and number of years the plan covers will play a key role in dictating how NHS bodies and experts receive May’s move. She and Hunt will be wary that a negative reception, especially from Stevens – who has publicly complained about May’s government underfunding the service – could take the shine off what ministers will hope is seen as bold and decisive action to help keep the NHS in good shape.
Hammond will set out in his next budget in November exactly where the money will come from and Stevens is drawing up a plan that will outline what the NHS will do with the cash boost.
Hunt has made clear that improvements to cancer care, maternity services, GP services and mental health – in which May has a personal interest – would be the priority areas for extra investment.