Cameron challenged over NHS pledge
Published 24/03/2011 | 04:42
Prime Minister David Cameron has been accused of breaking the coalition's pledge to increase funding for the National Health Service as soaring inflation threatened to undermine the Government's spending plans.
The respected Institute for Fiscal Studies (IFS) said the Government was now "sailing extremely close to the wind" over its promise to raise NHS spending in real terms every year of the current parliament.
In its analysis of the Budget, it said the worsening economic outlook meant there was now a 30% chance Chancellor George Osborne would have to put up taxes or find further spending cuts if he was to meet his deficit reduction plans. Health Secretary Andrew Lansley, however, insisted that the Government would meet its pledge.
The latest forecasts by the Office for Budget Responsibility (OBR) - published alongside the Budget - showed that the outlook for growth and inflation had worsened since the Government's spending review in October.
IFS analyst Gemma Tetlow said that at that time the Government had been on course to deliver a 0.3% real-terms increase in NHS spending over the life of the parliament, but latest OBR inflation figures now pointed to a 0.9% cut.
However, she said the figures in the Budget implied a real-terms freeze overall as they used a reduced baseline compared with the spending review figures - which had been adjusted for one-off expenditures - making it easier to claim future allocations were an increase.
"It is not clear from the political pledge exactly what baseline they are using," she said.
"Arguably, the Government is continuing to meet its pledge although they are using a different baseline. Either way you look at it, although they perhaps look on course to meet their pledge they are sailing very close to the wind.
"They are susceptible to the possibility that either changes to the spending figures or changes to inflation could easily tip them the wrong side of zero."
Whichever way it turns out, the NHS is facing the tightest spending squeeze since the 1950s, she added.