Spending Review: NHS gets 'bare minimum' funding rise

George Osborne: "Productivity in the NHS fell steadily over the last ten years and that must not continue"

The NHS budget in England will get the above inflation rises it was promised this parliament, but by only the "bare minimum" margin.

Funding will rise by £10bn to £114bn over the next four years - the equivalent of a 0.1% a year hike in real terms.

But the NHS still has to make some sacrifices.

Plans for one-week urgent cancer tests are being scrapped, while unions warned further cuts were inevitable.

Concerns are being raised because historically health spending has gone up by over 4% in real terms.

This is because the ageing population, obesity and the cost of new drugs mean an extra 3% is needed just to stand still.

'Fair society'

Fears were confirmed shortly after Chancellor George Osborne confirmed the rise in the budget in the House of Commons.

In his address, Mr Osborne explained the rise by saying: "The NHS is an intrinsic part of the fabric of our country. It is the embodiment of a fair society. To govern is to choose. And we have chosen the NHS."

Analysis

The funding settlement is one of the worst since the creation of the NHS in 1948.

It is the first time there has been such a sustained period of small rises.

The worst one-off cut was in 1953-4 when the budget fell by 6.3%, but that was followed by rises of 2.8% and 4.8%.

Small dips in the late 1970s and early 1980s were more than compensated for in subsequent years.

In fact, the £10bn rise by 2014 was virtually the minimum the government could get away with.

Ahead of the election, the Tories said the NHS budget would get above inflation increases.

It has, but only just.

The increase is the equivalent of just 0.1% a year on average - a sum which will be easily swallowed by rising costs from factors such as obesity and the ageing population.

But as soon as he finished the Department of Health confirmed the capital element of the spending plans, on things such as buildings, would be cut by 17%.

Pledges made by the previous government to offer one-week cancer testing with an urgent GP referral and to extend the free prescriptions scheme were both scrapped as well.

The health service has also been ordered to find £1bn a year by the end of the parliament to help social care services that overlap the NHS, such as rehabilitation care after discharge from hospital.

Meanwhile, the government was unable to guarantee that the cancer drugs fund would get £200m as previously promised.

This comes on top of the public pay freeze and purge of quangos already announced.

The NHS had already been planning for a squeeze.

The previous government asked the NHS to make between £15bn and £20bn of efficiency savings by 2014 - the equivalent of 5% productivity gains a year.

This target has been kept in place by the coalition despite the increase in the budget.

Health Secretary Andrew Lansley acknowledged the health service was facing a tough time.

He said: "The budget will have to stretch further than ever in these difficult times."

But unions said the consequences could be even greater, saying services could be closed and waiting lists rise.

Peter Carter, of the Royal College of Nursing, said the rise would "still feel like a cut".

'Havoc'

Unison general secretary Dave Prentis added it was a "facade".

"The NHS is not safe. Some hospitals are already cutting back on vital life-improving operations such as cataract, hip and knee replacements.

"The NHS needs extra funding just to stand still. It will not be able to keep up."

He also reiterated his criticisms of government reforms, which will see GPs take control of the budget and primary care trusts abolished.

He said they would "create havoc and instability just when the NHS can least afford it".

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A special BBC News season examining the approaching cuts to public sector spending

Professor John Appleby, chief economist of the King's Fund think-tank, even questioned whether the government had really kept to its promise.

"The NHS has got the bare minimum and I'm not sure you can say it is a real terms increase.

"There is an element of double counting to the social care promise. It is money the NHS is giving to other services. I'm not saying social care doesn't deserve it, but it is not money the health service can spend on what it wants to and if you take that out of the budget it is no longer a real rise."

However, the NHS Confederation, which represents managers, said the settlement was probably the best the health service could have hoped for.

The rest of the UK will not make a final decision on health spending until later this year. All have promised to offer some protection to the NHS, although not in such a categorical manner as ministers in England did.

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