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Growth in health spending slows Growth in health spending slows
(9 minutes later)
The rate of growth in NHS spending in England will slow over the next three years to 4% a year over the rate of inflation.The rate of growth in NHS spending in England will slow over the next three years to 4% a year over the rate of inflation.
This will mean the budget will rise from £90bn this year to £110bn in 2010.This will mean the budget will rise from £90bn this year to £110bn in 2010.
Chancellor Alistair Darling said cash would fund 20 new hospitals, 140 new walk-in centres open seven days a week, and 100 new GP practices.Chancellor Alistair Darling said cash would fund 20 new hospitals, 140 new walk-in centres open seven days a week, and 100 new GP practices.
However, since 2002, the health service has enjoyed record yearly rises of over 7% after inflation.However, since 2002, the health service has enjoyed record yearly rises of over 7% after inflation.
This was more than twice the average annual increase of 3.4% that the NHS received in the three decades before Labour came to power in 1997. The period of record investment was more than twice the average annual increase of 3.4% that the NHS received in the three decades before Labour came to power in 1997.
As a result spending on the health service as a percentage of gross domestic product has come close to the average of the 15 countries that made up the European Union in 2000.As a result spending on the health service as a percentage of gross domestic product has come close to the average of the 15 countries that made up the European Union in 2000.
Pay risesPay rises
However, a large slice of the new investment has been taken up by substantial pay rises for hospital doctors, GPs and nurses.However, a large slice of the new investment has been taken up by substantial pay rises for hospital doctors, GPs and nurses.
READ THE REPORT Pre-Budget Report and Comprehensive Spending Review 2007 in full [1.5MB] Most computers will open this document automatically, but you may need Adobe ReaderREAD THE REPORT Pre-Budget Report and Comprehensive Spending Review 2007 in full [1.5MB] Most computers will open this document automatically, but you may need Adobe Reader
In addition, structural reorganisation has cost many millions.In addition, structural reorganisation has cost many millions.
As a result the NHS ran up a deficit of £547m in the financial year ending March 2006, before balancing the books last year.As a result the NHS ran up a deficit of £547m in the financial year ending March 2006, before balancing the books last year.
At present, the health service is predicted to finish the current financial year with a surplus of around £900m.At present, the health service is predicted to finish the current financial year with a surplus of around £900m.
The big increase in NHS spending followed a review of the future needs of the health service carried out for the government by former banker Sir Derek Wanless in 2002.The big increase in NHS spending followed a review of the future needs of the health service carried out for the government by former banker Sir Derek Wanless in 2002.
Sir Derek accepted that the rate of growth in spending should slow down after big increases in the first five years.Sir Derek accepted that the rate of growth in spending should slow down after big increases in the first five years.
But he said the NHS budget would still need to grow by between 4.4% and 5.6% a year in the four years after 2007-08.But he said the NHS budget would still need to grow by between 4.4% and 5.6% a year in the four years after 2007-08.
Productivity improvement needed Productivity boost needed
The independent think tank the King's Fund said the onus would now be on the NHS to improve productivity, and make progress in tackling unhealthy lifestyles.The independent think tank the King's Fund said the onus would now be on the NHS to improve productivity, and make progress in tackling unhealthy lifestyles.
Niall Dickson, the chief executive, said: "Reducing the annual real growth from what it has been over the last seven years will feel like a cut.Niall Dickson, the chief executive, said: "Reducing the annual real growth from what it has been over the last seven years will feel like a cut.
"However, in a fiscally tight spending review, the NHS has done well compared with other departments."However, in a fiscally tight spending review, the NHS has done well compared with other departments.
"A slow-down in the growth of funding should not damage patient care and the delivery of better services as the NHS has been planning for this slow down. "A slow-down in the growth of funding should not damage patient care and the delivery of better services as the NHS has been planning for this slow down."
"In many ways, the NHS is in good shape to deal with lower growth in funding - it has more money, more staff, reduced waiting times, increasing patient satisfaction rates and no overall deficits." Professor John Appleby, the King's Fund's finance expert, said the new figures included around £1.8bn which had been clawed back this year after trusts failed to spend it on capital projects.
Professor John Appleby, the King's Fund's finance expert, said the increase in spending included around £1.8bn which had not been spent as predicted this year on capital projects.
Once this figure was taken into account the average rate of growth was closer to 3.1% a year over three years.Once this figure was taken into account the average rate of growth was closer to 3.1% a year over three years.