Boris Johnson is preparing to spend billions more on health and social care, including a hospital building programme and a far-reaching plan to ease the costs of care in old age as he seeks to lay out an expansive post-Brexit reform agenda.
Mr Johnson, who put the promise of an extra £350m a week for the NHS at the heart of the campaign to leave the EU, will instead use the “fiscal headroom” bequeathed by former chancellor Philip Hammond to fund his ambitious programme.
The plan to set aside money for new hospitals is intended in part to keep faith with voters who backed Leave on a promise of a better-funded NHS. Although details have yet to be thrashed out, people close to the issue said it goes beyond Mr Johnson’s announcement, in his first speech as prime minister, of 20 “hospital upgrades” to include brand new facilities.
While a £1.6bn investment fund for struggling towns, announced by Theresa May in March and aimed at Labour strongholds, was dismissed as a bribe by opposition MPs, Mr Johnson believes that a concrete promise of new hospitals in “left behind” areas would be hard to oppose given their popularity with voters.
One ally of Mr Johnson said: “The prime minister has always been very supportive of the need to invest in the NHS.” Government insiders expect an announcement on the new hospital building programme within days.
The Treasury and Number 10 are still in talks about how much money to allocate to the building programme, but earlier this year a Health Foundation analysis said an extra £3.5bn a year would be needed to bring capital spending on the health service in England up to the OECD average.
Questions are likely to be raised about how the government will fund the spending. The Office for Budget Responsibility’s March forecasts suggested the government would be able to borrow an extra £27bn while keeping the deficit within 2 per cent of gross domestic product in 2020-21 — the so-called fiscal headroom. But it has warned that headroom next year “does not provide an anchor for medium-term tax and spending decisions”.
Its forecasts also assume a smooth Brexit: no deal could add £30bn a year to borrowing from 2020-21 onwards. Moreover, the tax and spending plans Mr Johnson has laid out so far appear to add up to considerably more than £27bn, suggesting that he will need either to raise taxes, or rewrite the fiscal rules to accommodate higher borrowing, if he is to implement all of them.
Last year Mrs May announced an additional £20.6bn a year for the health service by 2023-24 but the settlement did not include additional investment in infrastructure. The need for a generous capital settlement for the NHS was highlighted by Simon Stevens, who runs the NHS in England, who in June warned the service needed “to make and win an argument about the adequacy of capital investment in the NHS” and suggested that more hospital beds were needed to cope with demand.
Separately, a consultative paper that laid out options for funding care for elderly and disabled people but which had languished unpublished as Brexit consumed ministerial attention, has already been ditched as Mr Johnson has sought to inject more urgency into the process.
The government is now expected in the autumn to publish a white paper proposing a clear course of action to address the crisis. Cuts in local authority budgets have left a gap between resources and demand of £3.6bn by 2025, according to the Local Government Association.
Mr Johnson last week vowed to settle the issue, which has defeated generations of politicians for at least 20 years, “once and for all”, saying no one should have to sell their home to fund care costs.
One idea under discussion is for personal care, such as help with everyday tasks like washing, dressing and eating, to be paid for from public funds. Two leading think tanks, the King’s Fund and the Health Foundation, last year suggested such care will cost about £7bn a year by 2020-21 and £14bn by 2030-31. Potentially accommodation costs in care homes could also be covered by the state, perhaps with those able to afford it contributing a set co-payment.
The prime minister’s team declined to discuss social care reforms. However, they are not expected to be delivered this side of a general election, not least because the government’s majority is now close to zero. “It will be a manifesto thing,” said one government insider.
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