The Government’s ability to boost health spending through a post-Brexit ‘dividend’ has been called into question, in a report by the Office for Budget Responsibility.
Doubts over ministers’ plans to increase funding to the NHS over the next five years have been highlighted by the OBR as part of its latest fiscal sustainability report.
In a speech last month, prime minister Theresa May promised to increase NHS funding by 3.4 per cent every year from 2019/20 to 2023/24.
To do this, Ms May advised that the necessary financial boost would be drawn from funds currently paid to the EU by the UK, along with as yet unspecified tax rises.
The report warns that far from providing a dividend, the UK’s upcoming exit from the EU is more likely to weaken rather than strengthen overall public finances, over the medium term.
It says: ‘Our projections are based on current stated Government policy [including] the Government’s as-yet unfunded June 2018 announcement of increased health spending over the medium term.
‘Announcing the additional health spending, the prime minister said that it would be funded by a “Brexit dividend, with us as a country contributing a little more”.
‘As already noted, the Government has not set out the size or composition of any additional taxpayer contribution, either through higher taxes or cuts in other spending, so we have not been able to include it in our projections.
‘As regards the “Brexit dividend”, our provisional analysis suggests that Brexit is more likely to weaken the public finances than strengthen them over the medium term, thanks to its likely effect on the economy and tax revenues.’
The OBR’s report further warns that while the ending of UK contributions to the EU would see a direct saving of £13bn in 2022/23, £7.5bn of this sum would be deducted as part of the agreed withdrawal settlement, leaving just over £6bn.
It said: ‘In principle this [£6bn] could cover slightly less than 30 per cent of the cost of the health package in that year, but this does not take into account other calls on these potential savings, including commitments the Government has already made on farm support, structural funds, science and access to regulatory bodies.’
The BMA, which opposes the UK’s exit from the EU, has long warned of the varied and significant risks to the NHS posed by Brexit, including the financial impact leaving could have on the NHS.
Following a vote at last month’s annual representative meeting in Brighton, the association also supports the UK remaining in the single market, and for any final deal on Brexit to be put to a public vote.