Theresa May 'using magic money forest' for NHS boost as 'Brexit dividend' claims challenged

Posted On: 
17th June 2018

Theresa May has been accused of using a "magic money forest" to fund a planned boost to NHS spending - as questions were raised over a so-called 'Brexit dividend' behind the pledge.

The Health Secretary and the Prime Minister ahead of the funding boost announcement

The Prime Minister today announced that the NHS is in line for an extra £20bn-a-year over the next five years, with average spending rises of 3.4% earmarked for the service.

Ministers are claiming that a 'Brexit dividend' will help to pay for the pledge after the Leave campaign in the referendum promised a £350m-a-week boost to the health service.

Theresa May says taxes will rise to fund £384m-a-week NHS spending boost

Theresa May to pledge extra £20bn in major funding boost for NHS

But Paul Johnson of the respected Institute for Fiscal Studies think today said that any talk of extra cash to spend on the NHS because of Brexit was wide of the mark - pointing out that the timeframe for the boost includes years in which the UK will still be paying into the EU.

"There isn't a dividend in two senses," he told the Sunday Politics. "First - over this period, if you look at the arrangement we've come to with the European Union in terms of paying our exit bill, and you add to that the commitments the Government's already made to keep funding farmers and so on, there is literally, arithmetically, no money.

"And in addition we know, because the Government's accepted this, that the public finances will be worse as a result of the Brexit vote."



Labour's Shadow Chancellor John McDonnell meanwhile went on the offensive, accusing Mrs May of making pledges that his own party would be ridiculed for.

"Is this coming from borrowing? What are the tax rises? Where is this Brexit dividend that no-one believes at all? It's all those questions that need to be answered," he told Pienaar's Politics on BBC Five Live.

He added: "Can you imagine if I came forward like this? There would be accusations of magic money trees. This is a magic money forest that's come out this morning."

Speaking earlier, Mrs May stopped short of spelling out how the rises would be paid for, pointing instead to reduced contributions to the European Union which she said would lead to "about £600m a week" extra - but only in cash terms - for the NHS by 2023.

Speaking to LBC radio, she also paved the way for a hike in taxes and borrowing, saying: "It is right, I think, that we say to people that because the NHS is so important to us that we do look at asking for the country to contribute more, but in a fair and balanced way."

But Mr McDonnell said the 3.4%-a-year rise promised by the Government was "nowhere near" the 4% called for by independent analysts. The figure is also below the 3.7% increase that the NHS has enjoyed over its 70-year existence.

"They've been investing 1.4% a year - they've created this crisis," he said. "Now they're trying to dig themselves, in panic measures, out a hole because they realise there's such a public reaction on the way in which the NHS has been damaged, almost destroyed by these Tories."

The Shadow Chancellor also sought to outbid the Conservatives on the fresh NHS pledge, insisting that his party would match and build on the commitment.

"If they do it that's great - and we'll inherit it and we'll add to it our income tax increases on the top 5% and the reversing of corporation tax and we'll be able then to give the NHS what it really needs which is more about 4-5%," he said.

Health Secretary Jeremy Hunt goaded the opposition over the funding increase this morning, writing in the Sunday Telegraph that while the party "like to talk big on the NHS", they would "never grow the economy, create the jobs or generate the tax income that are a vital pre-requisite to funding our NHS properly".

"In fact, this extra funding is actually greater than Labour’s NHS spending pledge during the last election," he said.

The new deal for the NHS was struck after extensive talks between Mr Hunt, NHS boss Simon Stevens and Chancellor Philip Hammond. It has been reported that the Department of Health was pushing for a 4% a year increase, while the Treasury dug in at 3%.

Mrs May promised there would be more detail on the ten-year NHS funding deal in the coming months.

"The Chancellor will set out in due course before the spending review, he’ll set out how the whole package of funding that we’ll be putting [forward]," she said today.