Labour’s disavowed austerity – £20 billion of NHS “cuts” as Labour likes to call them

The second, hidden plank of Alistair Darling’s three point austerity plan for a 2010 Labour government was large savings to be found in the NHS. These would allow the service to cope with increased demand whilst its budget was constrained in real terms to very modest growth whoever came into power in the 2010 general election. After 7% a year real terms growth during the first decade of the 21st century the NHS was going to have to eat into its fat. The first publicly available evidence of Labour’s £20 billion NHS savings, or cuts as they would call them, came from Sir David Nicholson, NHS Chief Executive. In his annual report (“The Year: NHS Chief Executive’s annual report 2008/09“) he spelled out on page 47 what became known as the Nicholson Challenge.

The Nicholson Challenge was not widely reported at the time but you can find references to it, for instance in June Nicholson was speaking to NHS finance directors and in September Andy Burnham, Labour’s secretary of state for health, was talking to the King’s Fund.

You may say this was contingency planning. It was not. These savings were desperately needed to make Alistair Darling’s books balance. In order to ensure that Labour had political cover to make these savings they were put in its 2010 manifesto on page 4:3.

Labour Manifesto Nicholson Challenge - close up

After the May 2010 general election the Coalition promised to protect NHS spending and indeed this was a clause in the Coalition Agreement:

The parties agree that funding for the NHS should increase in real terms in each year of the Parliament, while recognising the impact this decision would have on other departments.

But the Nicholson Challenge was already built into NHS spending plans in May 2010 and Coalition was obliged to continue with them. At this point the bland, officialese “savings” used by Andy Burnham, Sir David Nicholson and the Labour mainfesto became “Tory NHS cuts”.

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