Osborne's NHS cash pledge 'has unravelled', says Labour

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The government's promise of a £3.8bn financial boost for the NHS in England next year has "unravelled", the Labour Party has said.

The above-inflation cash injection represents a rise of nearly 4% on NHS England's £101bn front-line budget.

But Labour said the money would be swallowed up covering hospital deficits - which are expected to reach £2bn this year - and higher pension costs.

The government said Labour's assumptions were wrong.

"We're helping hospitals improve finances with tough controls on agency staff and management consultants and introducing some cost-saving measures identified by the government efficiency adviser Lord Carter," the Department of Health added.

Chancellor George Osborne announced the additional £3.8bn in real terms on top of NHS England's £100bn-a-year budget in the November spending review.

Chief economist from health think tank The King's Fund, John Appleby, said that although the NHS would get an increase in funding, it had "in effect, already spent the money".

The health service faced an "unprecedented" challenge, and would be starting the year with a deficit, and with extra costs ahead, he said.

Labour says that £2.2bn will be swallowed up by deficits at hospitals and other NHS trusts.

That figure is the total overspend projected by trusts this year, which Labour argues will continue in 2016-17 because of the intense financial pressures on the health service.

Labour says that on top of that, NHS employers will have to fork out more for employee pensions.

'More spin'

The lower national insurance contributions they currently pay for staff who have opted out of the second state pension will be abolished. A new single state pension will be introduced, which will mean higher employer contributions.

Quoting a parliamentary answer, Labour says that the pension reforms will cost NHS employers a further £1.1bn a year.

Adding that to the £2.2bn for covering trust deficits, Labour argues, means that much of the extra cash allocated for the NHS is already spoken for.

And that, says the party, leaves little to cover the anticipated increase in patient demand and the cost of government plans to extend NHS weekend working.

"George Osborne's promise of extra money to the NHS is more spin than substance," Labour's shadow health secretary Heidi Alexander said.

"The scale of the financial challenge facing the NHS means that there are now real doubts about whether this money will be sufficient to repair hospital finances, let alone deliver the Tories' promise of a 'seven-day NHS'."

But the Department of Health questioned Labour's figures.

Officials said it was wrong to assume that the £2.2bn total projected deficit for trusts this financial year would continue through next year. They said trusts would continue to make efficiency savings which would reduce the level of overspending.

By 2020-21 the total NHS budget will be £119.6bn - a rise of £8.4bn once inflation is taken into account - meaning the government will have kept its manifesto promise.

Labour's critics point out that the party did not match the Conservatives' election pledge to raise NHS spending in England by that amount.

Labour said it only offered voters "fully costed" spending commitments.

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