Liam Rhodes

NHS “Brexit dividend”: The sums don’t add up

NHS “Brexit dividend”: The sums don’t add up

l_rhodes June 17, 2018
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We all know that the NHS is in desperate need of a cash injection. Waiting lists for crucial services continue to rise, especially in the mental health sector, and the quality of care that we are receiving as patients cannot continue unless it receives additional money.

We have been told by Theresa May that we are to receive a NHS “Brexit dividend”. Ministers are claiming that we will divert £9bn of UK contributions into NHS funding, but what they aren’t saying is that on that point, the numbers alone do not add up. We are to pay a divorce bill, admittedly front-loaded, until 2064. I would draw your attention specifically to 2019, which means that there is already a fiscal black hole of more than £9bn.

And so we start with we have seen delivered to us by the press today (and that Mrs May will propose on Monday). The NHS will receive £20bn per year in much-needed resources, with a five-year funding plan seeing 3.4% on average, with 4% in the first two years.

But without that Brexit dividend, given that we will be paying money to the EU for the foreseeable future, where exactly is it going to come from?

Jeremy Hunt has made it clear in an interview with The Sunday Times that he will “go into battle with the Treasury to secure the money he needs”, but this is meaningless.

As the IFS stated, if the DHSC day-to-day budget were to be increased by 4% a year in real terms over the four years from 2019–20 to 2022–23 (inclusive) this would increase spending by £21 billion. Hunt’s claim that he will battle with the Treasury to obtain money from them is intangible when the Treasury is operating on the sensible assumption that it is desirable to reach an overall budget balance by the mid-2020s.

So if there is no dividend, there remain continued fiscal targets, where will the money come from? My guess is that you can expect to see a rise of at least 2p on your Income Tax in the next Budget – something which will directly breach the Conservative Party’s manifesto commitments. And if this involves any deviation from taking the lowest-paid earners out of the tax, the Government will be punishing those who do the right thing with very little reward.

I look forward to seeing how she manages to get herself out of this farce.

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