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Treasury / Department of Health 1

A MODERN NHS FAIRNESS FOR FAMILIES AND COMMUNITIES

21 March 2000

A historic four year package of funding for the NHS was announced by Chancellor Gordon Brown today, to be accompanied by a national consultation on measures to drive up performance which the Prime Minister will announce tomorrow.

The Chancellor has made available for the UK:

  • an extra £2 billion for the National Health Service for the year from April including extra resources from the tobacco tax increase;
  • 6.1 per cent average annual real terms growth over the next four years - the longest period of sustained high growth in the history of the NHS;
  • a 50 per cent cash increase in NHS spending over the five years from the beginning of the first Comprehensive Spending Review - 35 per cent in real terms - equivalent to a rise in NHS cash spending per household from £1,850 in 1998/99 to £2,800 in 2003/04.

Speaking today, Secretary of State for Health, Alan Milburn, said:

"These are large and sustained increases in funding which will give the NHS a unique opportunity to invest for reform. The four year settlement provides the platform the NHS needs to plan far-reaching service modernisation. It amounts to a step change in NHS resources. Now we need a step change in results.

"The Government has met the call for increased funding. Now we look to work with the Service to deliver major improvements in patient care.

"It is not just money that the NHS needs. It is reform. The focus now needs to be on the modernisation that is necessary to build the 21st century NHS our nation needs."

Budget 2000 announces the largest ever sustained increase in NHS resources with new baselines fixed for the medium term. Over the next four years NHS funding in England will grow by an average 6.3% in real terms - twice the historical average. This will deliver the longest period of sustained stable growth in resources since the NHS was founded. In England NHS resources will grow in real terms by 36% over the five years from 1999/00.

On Wednesday the Secretary of State for Health will set out to the House of Commons how increased resources will help speed up the modernisation of patient services.

There will be a new focus too on reforming the performance of local health services to address unacceptable variations in quality and cost. Mr Milburn added:

"At present there is too much variation in practice between different parts of the NHS. That is unfair both to patients and to taxpayers. Getting the most from these unprecedented funding increases will need new ways of ensuring that the rest perform to the level of the best. By forging an alliance with clinicians, managers and patients in the NHS we can do just that."

The Prime Minister will make a statement to Parliament tomorrow on work to reform and modernise the Health Service and to tackle unacceptable variations in performance, to ensure that a step change in resources can achieve a step change in results.

Notes for editors

1. The new resources are broken down as follows:

        NHS UK, cash (£ billion)
   1998/99  1999/00  2000/01 2001/02  2002/03  2003/04   Average
 Previous plans (£bn)  45.1  49.3  52.2  55.5      
 New allocations (£bn)  45.1  49.3  54.2  58.6  63.5  68.7  
 Year on year real growth (%)      7.4%  5.6%  5.6%  5.6% 6.1% 

Note: these figures include additions to the devolved administrations and the Northern Ireland departments.

        England, cash (£ billion)
   1998/99  1999/00  2000/01 2001/02  2002/03  2003/04   Average
 Previous plans (£bn) 36.6   40.1  42.6  45.4      
 New allocations (£bn)  36.6  40.1  44.2 48  52  56.4  
 Year on year real growth (%)      7.9% 5.8%  5.8%  5.8% 6.3%

2. For historical reasons, health spending starts from higher levels in the rest of the UK than in England.

3. This will be the first period in the history of the NHS with 4 years of over 5 per cent real terms growth in every year.

4. Last year, NHS spending was equivalent to an average of £1,850 per household. The new baselines represent £2,800 per household in 2003/04.

5. On the basis of current forecasts, this package implies that UK health spending as a proportion of GDP could reach around 7.6% by 2003/04.

6. The Prime Minister's announcement tomorrow will help ensure that best practice in the provision of healthcare is shared across the NHS, including in the areas of health outcomes, service quality, efficiency, access to services and patient experience; and that variations in these areas are reduced, for example through improved performance systems such as better use of inspection and information, management levers and benchmarks.

7. The figures for public services presented in the Budget are in cash terms. The Department of Health, like all other Government departments, will move to resource accounting and budgeting in July. This change in accounting methodology will not affect cash totals.