Prime Minister David Cameron has been accused of breaking the coalition’s pledge to increase funding for the National Health Service as soaring inflation threatened to undermine the Government’s spending plans.
The respected Institute for Fiscal Studies (IFS) said the Government was now “sailing extremely close to the wind” over its promise to raise NHS spending in real terms every year of the current parliament.
In its analysis of the Budget, it said the worsening economic outlook meant there was now a 30% chance Chancellor George Osborne would have to put up taxes or find further spending cuts if he was to meet his deficit reduction plans. Health Secretary Andrew Lansley, however, insisted that the Government would meet its pledge.
The latest forecasts by the Office for Budget Responsibility (OBR) – published alongside the Budget – showed that the outlook for growth and inflation had worsened since the Government’s spending review in October.
IFS analyst Gemma Tetlow said that at that time the Government had been on course to deliver a 0.3% real-terms increase in NHS spending over the life of the parliament, but latest OBR inflation figures now pointed to a 0.9% cut.