NHS ‘Brexit dividend’ met with scepticism

Theresa May’s extra £20bn a year described as ‘tosh’ by Tory MP

Vote Leave's NHS claim was widely discredited during the referendum
The Vote Leave bus that featured the controversial £350m claim regarding EU funding
(Image credit: Jack Taylor/Getty Images)

Theresa May’s gift to the NHS of an an extra £20bn a year, funded in part by a “Brexit dividend”, has been met with anger and scepticism by experts, opposition MPs and even some in her own party.

The extra funding “marks a dramatic break with eight years of austerity and follows a difficult battle with the Treasury for more funds”, reports The Independent.

Where will the money come from?

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The PM, who will formally set out the spending plan for the NHS in England today, remained vague about where the extra money would come from, but the Government has hinted it would have to rise taxes and increase borrowing.

The rest of the money will come from what ministers are calling a “Brexit dividend”, by diverting the £9bn the UK currently pays into the EU budget to NHS funding.

“At the moment, as a member of the European Union, every year we spend significant amounts of money on our subscription, if you like, to the EU,” the PM told the BBC’s Andrew Marr yesterday. “When we leave we won’t be doing that. It’s right that we use that money to spend on our priorities and the NHS is our number one priority.”

The Times described the increase as “a victory for Brexiteers Boris Johnson and Michael Gove”, who lobbied vocally in cabinet for a Brexit dividend for the health service, and says it will “enable the prime minister to claim she has fulfilled the controversial pledge of pro-Brexit campaigners to increase NHS spending by £350m a week”.

Do the numbers add up?

May’s decision to fund the increase partly from a Brexit dividend “signals an insistence that the UK will leave the EU next year, and is likely to frustrate pro-Remain MPs and peers pushing for the country to stay within the bloc or keep the closest possible ties” says The Sunday Telegraph.

But the argument Britain could redirect money it currently sends to Brussels after Brexit “contradicts official forecasts, which predict that leaving the EU will weaken the public finances, at least in the short term”, reports The Guardian.

EU contributions until 2022 have already been earmarked, either to keep paying into Brussels budgets or to replace this spending elsewhere says the paper.

The director of the respected Institute for Fiscal Studies, Paul Johnson , told the BBC’s Sunday Politics: “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 has already made to keep funding farmers so on, there is literally, arithmetically, no money.

He says the Government has accepted that Brexit would swipe £15bn a year from revenues – or £300m a week.

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What has been the reaction?

Labour accused May of relying on a "hypothetical" windfall, with shadow chancellor John McDonnell describing the source as a "a magic money forest".

May also faced criticism from within her own party, with Conservative MP Sarah Wollaston, who chairs the Commons health and social care committee, describing the idea of a Brexit dividend as "tosh" and accusing the government of using "populist arguments rather than evidence".

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The PM is also under pressure over the amount of the increase which, at 3.4% until 2023-24, is in fact lower than the 3.7% average rise in NHS funding over the past 70 years.

Even so, the handout, which was finalised on Friday after a tense stand-off between the Treasury and the Health Secretary Jeremy Hunt, has "sparked a mutiny" at the heart of government, The Times reports. It says at least six senior cabinet members are demanding more money for police, defence, housing and schools.

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