May Revives Promise of ‘Brexit Dividend’ for U.K. Health Service
Posted June 18, 2018 4:06 p.m. EDT
Few British institutions are as respected as the country’s health care provider, the National Health Service, and a pledge to divert money to it helped convince Britons to vote for withdrawal from the European Union.
But that claim was long ago debunked, and by promising a “Brexit dividend” for health provision Monday, Prime Minister Theresa May heightened the acrimonious debate over Britain’s exit from the 28-country bloc while leaving key financial questions unanswered.
Speaking in London, May said the health service, which is under severe strain, would be given an extra $26 billion a year by 2023, an increase of around 3.4 percent.
“Some of the extra funding I am promising today will come from using the money we will no longer spend on our annual membership subscription to the European Union after we have left,” she said in a speech.
May did later acknowledge that taxes would have to rise to fund health care. “As taxpayers we will need to contribute more,” she said, adding that detailed plans would be given later in the year.
Just about everyone seems to agree that the health service is seriously underfunded, after a lengthy squeeze on its finances and in the face of steadily rising demand for health care, most of which is delivered free and to a rapidly aging population.
Founded after World War II, the health service celebrates its 70th anniversary this year and is such a popular institution that it figured prominently in the opening ceremony of the London 2012 Olympics. Despite suffering the service’s frequent shortcomings, the population has remained so faithful to the concept of free health care that a former Chancellor of the Exchequer, Nigel Lawson, once described the NHS as “the closest thing the English have to a religion.”
That explains the potency of the pledge, made by Brexit supporters in a 2016 referendum, to divert 350 million pounds — $465 million — a week from Britain’s annual payments to the European Union to the health service. The figure (which was based on gross, rather than net, contributions to the organization) was later described by Britain’s statistics agency as “a clear misuse” of official data.
May’s promise of a 3.4 percent overall increase in health care spending would exceed the 350 million pounds figure that was famously emblazoned on the side of a campaign bus used by prominent Brexit supporters, including Boris Johnson, now the foreign secretary.
Yet, although it works out at around $510 million a week, it is less impressive than it sounds. The health service’s average annual funding rise since its foundation in 1948 has been 3.7 percent, although that dipped to around 1.1 percent after 2010, when a Conservative-led coalition government squeezed spending after the financial crisis.
Health advocates welcomed the commitment from May, but said more was needed if care was to improve rather than stay at its current level; the service has been widely criticized over lengthy waiting times for elective surgeries and emergency room care, among other things.
Chris Ham, chief executive of The King’s Fund, a charity focused on health care, said her pledge “falls short of the 4 percent annual increases we argued are needed.”
“Hard choices lie ahead and it will be difficult to reduce financial deficits among NHS providers, get back on track in delivering national waiting-time standards and bring about further improvements in services like cancer care, mental health and general practice,” he said in a statement.
He added that it would “also be challenging to sustain increases in productivity, which have generally outpaced the economy in recent years.”
Jeremy Corbyn, the leader of the opposition Labour Party, argued that May’s promises were insufficient for a service “in crisis.”
More contentious is the assertion that, in the near future, the health service will be funded, even in part, by a Brexit dividend.
May based the claim on the fact that Britain, which pays around $12 billion a year to the bloc in net contributions, will cease to make those payments once it leaves.
But in the short term at least, that money will be swallowed up by a divorce payment of around $52 billion that Britain has agreed to pay the bloc to honor outstanding commitments, and by other pledges. These include a promise to maintain subsidies for British farmers, which are paid by the European Union, for several years.
Meanwhile, experts say the government can expect to have less to spend because of lower than expected economic growth. Paul Johnson, director of the Institute of Fiscal Studies, a highly regarded research institute, noted that the government had accepted an analysis suggesting that Brexit would weaken public finances by about $20 billion a year.
“There is no Brexit dividend,” said Johnson, adding that “payments to the EU will fall, but tax revenues will fall more as a result of Brexit.” Funding for health care is therefore likely to come from higher taxes and borrowing.
Boris Johnson — the foreign secretary — welcomed May’s pledge as a vindication of his referendum promise, describing it as a “down payment on the cash we will soon get back from our EU payments.”
But before May’s speech, even the right-leaning Daily Telegraph seemed less than convinced, its front-page article reporting that stealth taxes would be called upon to pay for extra health care spending.
One Conservative lawmaker and critic of May’s Brexit policy was more direct. “The Brexit dividend tosh was expected,” wrote Sarah Wollaston, who chairs the health and social care parliamentary select committee, on Twitter, “but treats the public as fools.”