Clegg plan to link NHS spending to economic growth

Deputy Prime Minister Nick Clegg. Picture: John Devlin

Mr Clegg said the Liberal Democrats were the only party able to show how they would meet “in full” the increase of £8 billion a year by 2019/20 NHS chief executive Simon Stevens says is required to prevent it collapsing.

Under the blueprint, the additional £2 billion announced by Chancellor George Osborne for 2015/16 in the Autumn Statement would be repeated every year of the next parliament - though officials were unable to identify where that cash would be found in future.

Another £1 billion a year from 2016/17 would come from a pension tax relief and dividend tax squeeze on high earners, and ending the Conservative “shares for rights” policy - a move agreed at the party’s conference.

The bulk of the boost would come, however, from the Lib Dems’ pledge to increase public spending in line with the growth of the economy after eliminating the structural deficit in 2017/18.

Meanwhile, Conservative Chief Whip Michael Gove indicated that Tories would use some of the cash made available once the deficit is eliminated to fund the £7 billion income tax cut promised by David Cameron, who has pledged to raise the personal threshold to £12,500 and the threshold for the 40p rate to £50,000.

In comments which appeared to suggest that the cuts may not come until the final year of the next Parliament, Mr Gove told BBC2’s Newsnight the Office for Budget Responsibility (OBR) was predicting a surplus of £23 billion by 2019/20 under Tory plans, adding: “Within that, we can afford to have tax cuts ... If you’ve got £23 billion spare, left over, then you can take £7 billion out of that for tax cuts.”

Labour dismissed the Lib Dem announcement as an unfunded “empty promise” which would not match its own pledge of £2.5 billion for the NHS. The party’s leader in Scotland, Jim Murphy, has said Labour would use cash from its “mansion tax” on homes worth over £2 million - most of them in London and the South-East - to pay for 1,000 extra nurses north of the border.

But shadow chancellor Ed Balls signalled that victory for Labour would not mean more generous pay rises in 2015/16 for nurses and other public sector workers, telling reporters he cannot commit his party to reversing the public sector pay squeeze or scrapping council cuts in the first year after the election.

Mr Gove said that Tories had succeeded in “flushing out” Labour on the issue by putting the spotlight on its spending plans, telling BBC2’s Newsnight: “We discovered that there were some policies which Labour had been maintaining were part of their core appeal, but have crumbled like some ancient piece of marble when a little bit of pressure was applied.”

Mr Clegg - whose election campaign is centred on the need for his party to be in coalition to temper the “excesses” of either a Tory or Labour government - is keen to set the running on what promises to be the key election issue of health.

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Mr Stevens yesterday warned of a public backlash unless the next administration made a “thoughtful, sequenced series of annual real funding increases, building on next year’s ‘downpayment’, against which the health service can plan and make the necessary efficiencies”.

An ageing population and expensive new treatments have put a serious squeeze on the NHS and the chief executive believes that the budget must be at least £8 billion higher in real terms by 2020 just to keep going - even after more efficiency measures.

Challenging other parties to match the spending commitment, Mr Clegg said: “The Liberal Democrats are the first party to have a fully worked-up plan to meet the financial needs - the £8 billion of extra money for the NHS by the end of next parliament - as set out by Simon Stevens.

“We are setting out today a plan about how we can meet that funding gap that has been independently identified as necessary to make sure that our NHS is protected, cherished and supported now and long into the future.

“The big, big difference between ourselves and Labour and the Conservatives is that we have said that once we have dealt with the structural deficit, once we have dealt with it in 2017/18, we will link the amount of money going into public services - including the NHS - to the growth of the economy.

“The Conservatives have not done that at all - they actually want to see the proportion of money going into public services remorselessly decline as a proportion of our national wealth for ideological reasons.

“Labour will still be paying off much, much more interest on our accumulated debts because they haven’t committed to the timetable by which we would deal with the deficit. Money which instead could be spent on hospitals.

“So, we are the only party that, by managing things responsibly and in a balanced way ... can meet the Simon Stevens challenge and meet it in full.”

The Liberal Democrat plans are based on the economy recovering in line with current projections made by the OBR - giving sufficient spare capacity to add at least £2.5 billion a year to NHS spending in the final two years of the parliament.

That would take it to the £8 billion figure called for by Mr Stevens.

Shadow health secretary Andy Burnham said: “Nick Clegg has copied the Tories at reannouncing money from within the NHS. Labour’s fully funded plan will invest an extra £2.5 billion each year in the NHS to recruit a new workforce, including 20,000 more nurses and 8,000 GPs.

“You can’t trust a word the Lib Dems say and more empty promises from Nick Clegg are the last thing the NHS needs. After backing David Cameron’s NHS reorganisation and privatisation plans to the hilt, the public will not believe a word of this unfunded policy.”

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