Darling paves way for health service cuts

Published on Tuesday 8 September 2009 22:26

ALISTAIR Darling yesterday gave the clearest sign yet that the NHS will not be immune to public spending cuts when he said "hard choices" would have to be made to tackle the country's growing debt.

The Chancellor said a forthcoming efficiency drive would include the NHS, despite previous assurances from the government that health and education would be protected as the UK attempts to break free from recession.

Mr Darling said NHS money would have to be spent "more effectively", raising the prospect for the first time of savings being made in the Westminster health budget.

Reducing the health budget in London would have a knock-on effect in Scotland, and last night the Scottish Government declined to guarantee that cuts would not be made at Holyrood.

After months of Labour reluctance to address the issue of national debt, Mr Darling finally acknowledged that his government would have to make cuts in the future saying that "hard choices on public spending" were needed. The Chancellor warned that "more efficiency, continuing to reform" and "cutting costs" were essential to rebuild the economy.

He said: "These are the big questions of tomorrow and we need to work on them together today. The next few years will be difficult. The decisions we as a country make now will have an impact for decades to come."

In his 2009 Budget, Mr Darling forecast that national debt would reach 1.4 trillion.

The Chancellor admitted he would have to borrow 175 billion in 2009-10, the equivalent of 12.4 per cent of gross domestic product (GDP) and the biggest annual deficit ever recorded in peacetime.

Mr Darling yesterday stopped short of identifying which public services would have to be cut to balance the public finances.

But delivering the James Callaghan Lecture at Cardiff City Stadium, he revealed that the NHS would be expected contribute to savings when he outlines his spending proposals in the Pre-Budget Report this autumn. Although funding of NHS in Scotland is governed by Holyrood, any reductions in health spending taken at Westminster will affect Scotland as a result of the Barnett Formula, the mechanism that determines how much money the Scottish Government gets.

Last night a spokesman for the First Minister did not rule out similar action having to be taken here. "So far the Labour Party has been living in fantasy land, claiming that cuts in the Scottish budget were not happening," Alex Salmond's spokesman said.

"But they are happening and that has been clear since the Pre-Budget Report of last year. We will be bringing forward a draft budget in the near future to set out our spending priorities."

Mr Darling said the first priority was to make efficiency savings in the public sector. He said he hoped this could be done by shifting resources to the front line rather than by reducing services.

When it came to the health service, he said money had to be spent "more effectively" in preventing illness in order to avoid development of long-term conditions which are expensive to treat. The government would also revisit NHS performance targets to increase flexibility within the system.

Mr Darling tried to leaven his message by saying that he would not follow the Tories' suggestion to cut public spending immediately. He also said that spending changes would be driven by "our core values of fairness and responsibility".

Taking a pop at the Conservatives, Mr Darling said: "Some seem in a hurry to cut services. We are focusing on cutting costs."

But his speech was attacked by George Osborne, the shadow chancellor, who claimed it lacked substance.

Mr Osborne said: "After all the spin, Alistair Darling's speech was striking for what was not in it. No new commitments to reduce spending, no use of the word cuts and no repetition of the Prime Minister's dishonest claim that government policies had saved 500,000 jobs."

Conservative leader David Cameron said only his party was being "straight" with people about dealing with the "deficit crisis". He said: "We've taken the bold step of saying to the British public very clearly, with a Conservative government, public spending will be cut. Not reduced in growth, not frozen, but cut. That candour is a world away from the current Labour government."

A return to growth – but true recovery still to come

THE UK saw its first quarterly growth since May last year in the three months to August, an economic forecaster has revealed.

The National Institute of Economic and Social Research's (NIESR) latest estimate showed a 0.2 per cent rise in output in the period after a 0.3 per cent decline in the three months to July.

The NIESR said that the figures reinforced its view that the recession ended in May – although the body had predicted earlier this year that the downturn ended in March.

However, the forecaster warned that a return to growth should not be confused with a full economic recovery.

It added: "There may well be a period of stagnation now, with output rising in some months and falling in others.

"The end of the recession should not be confused with a return to normal economic conditions."

Experts predict that estimates from the Office for National Statistics on output for the June to September period will show a return to growth after a decline of 0.7 per cent during the second quarter of the year.

Meanwhile, manufacturing figures released yesterday showed a 0.9 per cent rise in output between June and July – the sector's best performance in more than three years – boosted by recovering production levels among car makers.