How much will the NHS lose?

In the run up to the EU referendum, the Leave campaign promised that a funding bonanza for the NHS would be one of the many benefits of leaving the EU. Official Leave campaign posters notoriously pledged that £350 million a week would be used to fund the NHS instead of being sent to Brussels. Now it seems that Brexit will deliver the opposite of what was promised: instead of gaining £350 million a week, the NHS will be making a loss of £365 million a week by 2030, according to a new Health Foundation report. And that’s the optimistic outlook, based on an assumption that the UK will be allowed to join the European Economic Area. If it’s excluded from the EEA, the NHS in 2030 may be running a deficit of £540 million a week.

Vote Leave's £350 million claim was exposed as a lie before the referendum, based on gross figures that didn’t take into account Britain’s rebate or EU money spent in the UK. As James Meek put it:

A more accurate version of the Vote Leave poster would run: ‘Let’s abolish farm subsidies, raise taxes and use all the money we save by leaving the EU so we can spend an extra £350 million a week on the NHS.’

The Leavers backtracked on the exact amount of the NHS windfall, but stuck to their promise that Brexit would mean more cash for the NHS: £100 million a week was the new figure. Michael Gove, Boris Johnson and Gisela Stuart said on 3 June that the government ‘should use some of the billions saved from leaving the EU to give at least a £100 million per week cash transfusion to the NHS’. Some NHS staff may have been convinced. A poll of 522 nurses carried out by the Nursing Times before the referendum found that 45 per cent believed NHS finances would be better off after Brexit, compared to 29 per cent who thought they would be better off if the UK remained in Europe.

Others were more sceptical: a poll of 380 GPs found that 71 per cent wanted to remain in Europe. More than half believed that leaving the EU would have a negative effect on the NHS. It seems their scepticism was well placed. The Health Foundation report concludes that the NHS will receive additional funding only if one of three things happens: a higher fiscal deficit, higher taxes or cuts to other areas of public spending.

The National Institute of Economic and Social Research predicts an economic slowdown, with 1.5 per cent growth a year between 2015-16 and 2019-20 instead of the 2.1 per cent predicted by the Office for Budget Responsibility in March, with an estimated total loss to the UK economy of £43 billion in 2019-20 (£835 million a week). Even taking into account the £4 billion a year that the UK would have left in its pot of former EU funds after paying the costs of a trade agreement with the EEA, this means a budget deficit of £16 billion in 2019-20 instead of the £10 billion surplus that the 2016 budget anticipated. To balance the budget, NHS spending would have to fall from the planned £121.7 billion to £118.9 billion, the Health Foundation calculates. The Conservatives have now abandoned their target of balancing the budget by the end of decade, but George Osborne also warned before the referendum that leaving the EU would lead to cuts in NHS funding.

Anita Charlesworth, the director of research and economics at the Health Foundation, said:

It is widely anticipated that leaving the EU will lead to lower economic growth, and when the economy sneezes, the NHS catches a cold. The NHS is already halfway through its most austere decade ever, with finances in a truly dire state – it cannot afford to face another hit.

The terrible state of current NHS finances has been further underlined by a report from the King’s Fund, which calls on politicians to be ‘honest’ with the public about the healthcare system. At the end of the last financial year, NHS providers and commissioners between them had a deficit of £1.85 billion – up from £554 million the previous year and the largest aggregate deficit in NHS history. ‘The scale of the deficit,’ the report concludes, ‘signifies a system buckling under the strain of huge financial and operational pressures.’ The King’s Fund identifies inadequate funding as the principal cause of the deficit, and warns that cuts in staffing and reductions in quality of care are inevitable if the government’s priority is to restore financial balance.