Graphs at a glance: NAO report shows public spending cuts are pushing the NHS into a black hole of deficit

The Office of Budget Responsibility's "Economic and Fiscal Outlook 2014", published in December 2014, stated that by 2019-20 public spending as a share of GDP will fall back below its lowest level since the Second World War. 

When questioned about this on BBC Radio4's Today Programme George Osborne retorted "Has the World fallen in? No it has not!". If Osborne's measure of economic success is the World not "falling in", perhaps he isn't doing so badly. Others may use other measures.

We are in a 'low wage recovery', where the rewards of relatively strong GDP growth are being kept by the few. Lower wages for the many and lowering tax rates for the few (top rate income tax and corporation tax) means no increase in government receipts.

The OBR put this planned collapse in spending in pounds and pence:

"Between 2009-10 and 2019-20, spending on public services, administration and grants by central government is projected to fall from 21.2 per cent to 12.6 per cent of GDP and from £5,650 to £3,880 per head in 2014-15 prices."  

The politically non-aligned Institute for Fiscal Studies (IFS) warned of more "colossal" spending cuts to come if the government aims to eliminate the deficit by austerity alone: 

Colossal cuts to come, on top of the colossal cuts that have already happened. The NHS is evidence of what is happening. A report by the National Audit Office shows National Health Service providers are falling into deficit like a row of toppling dominoes. The report states:

"The total number of providers in deficit increased from 25 in 2012-13 (10% of all secondary providers) to 64 in 2013-14 (26% of all secondary providers).

There were 5 NHS trusts in deficit at the end of 2012-13 and 22 at the end of 2013-14 [plus one more trust that was dissolved in October 2013, making a total of 23 trusts in deficit during 2013‑14].

The number of foundation trusts in deficit doubled from 20 in 2012-13 to 41 in 2013‑14."

The graph below shows how the dominoes are falling. 18 trusts which had neither a surplus or deficit in 2012-13 went into deficit in 2013-14. The graph shows another 10 trusts in 2013-14 with neither surplus nor deficit, perhaps to be the next dominoes to fall?

Fuscia and green text in graph above added by us

In November 2014 Colchester Hospital declared a "major incident" in which the hospital implored people not to go to its Accident & Emergency (A&E) unless they really really needed to. A result of the appalling Department of Health "marginal rate rule for emergency admissions"? This rule states a hospital gets 70% cut from its payment for any patients above the number they admitted in 2008/09:

"The 30% marginal rate rule for emergency admissions - under which providers are paid less for admissions over a certain level - was introduced in 2010 following concerns over growing emergency admissions."

This rule was specifically designed as a penalty to make hospitals restrict their A&E services.

Are the Tories fighting a righteous fight to bring down the cost of an excessively expensive health service? Not according to figures from the World Bank they aren't. UK health spending as a percentage of GDP is below the US, France, Germany, and below average for the European Union overall.

World Bank Figures

George Osborne did his best to create a smokescreen until the 2015 election. Until then he lobs occasional wads of cash at the NHS to keep it ticking over. Such as the £300 million announced in November 2014 to help the NHS get through the winter.  Dr. Mark Porter, the British Medical Association committee chair, dismissed this £300 million as a 'sticking plaster' saying there is a £30 billion funding gap opening up in the NHS. 

The National Audit Office report in November 2014, before the £300 million mentioned above was announced, said in 2013-14 another £500 million was lobbed at the NHS to keep the creditors at bay and to pay staff:

"[The] report notes that financial risk is increasing in NHS trusts and foundation trusts, and those in severe financial difficulty continue to rely on in-year cash support from the Department of Health. In 2013-14, over £0.5 billion extra money was issued to 21 NHS trusts and 10 foundation trusts to ensure that organisations in difficulty have the cash they need to pay staff and creditors."

Tossing a few hundred million here and there to plaster over the cracks is evidently the government's short term strategy to stop the World "falling in" before the next election. Will Dave and George pull it off? It's up to us voters, and we'll find out in May 2015.