Ed Poole and Guto Ifan look at the changes in spending on health across the UK.
The publication of the Treasury’s Country and Regional Analysis data gives us an important annual look at spending patterns in Wales, and how decisions on devolved spending in Wales compared with those taken for the rest of the UK over the previous five years. Significantly, the latest report gives us a first picture of how each country dealt with the challenges of austerity budgets over the entire course of the last parliament.
Welsh Government decisions on health have rarely been far from political attention (and criticism) since the start of devolution, and no more so than during the 2015 General Election campaign. The most recent Treasury data starkly illustrate the Welsh Government’s decision early in the parliament to use Barnett consequentials from protected English NHS spending to moderate the impact of cuts across other areas of Welsh spending such as local government. As shown in in figure 1, per capita expenditure on health in Wales fell from being much higher than the UK average in 2010-11, to being just below it in 2013-14.
However, since 2013-14, the Treasury data also document the change in approach by the Welsh Government. Health expenditure in Wales grew by more than 4.6% in nominal terms from 2013-14 to 2014-15, reflecting the Welsh Government draft budget of October 2013 that found additional funding for health by cutting deeper elsewhere. This decision once again pushed per capita spending on health back above the UK average in the last financial year.
As could be expected, the change in spending priorities did not fully reverse the effects of earlier budgets. As can be seen in figure 2, health spending in Wales remains below (-2.1%) its 2010-11 level, comparing with a 6.1% increase in health spending over the same period in England. Scotland saw a slight decrease of -0.8%, although Scottish health spending has been much more consistent than in the rest of the UK over the past five years.
The change in the Welsh Government’s approach is also reflected in the 4.1% real terms decrease in local government expenditure in Wales since 2012-13. In contrast, local government expenditure in England was cut earlier in the last parliament, and is down by 12.1% since 2010-11.
Adding social services to the mix
Changes to healthcare provision and in particular its degree of integration with social care have led to calls for a more complete accounting of health spending across the different countries of the UK, one which also incorporates spending on social services under the control of the devolved administrations.
A Welsh Government written statement coinciding with the CRA publication notes the relatively steep increase in health spending per head in Wales from 2013-14 to 2014-15, and also draws attention to ‘combined spending per head on health and social services [that] was £172 or 7 per cent higher than in England in 2014-15’. Although it does not feature in the headline categories of spending, this combined figure for health and social services for 2014-15 can be calculated from various subcategories in the Treasury data.
Figure 3 shows a comparison of this combined health and social services measure by country from 2010-11 to 2014-15. As with health spending considered on its own, total Welsh expenditure in these combined areas had been falling in real terms but changed course to track the reprioritisation of health spending midway through the five-year period. Interestingly, although the Welsh Government statement draws attention to Wales’ positive advantage in per capita spending, England was in fact the only UK country to record a (slight) real terms increase in combined health and social services expenditure over the five year period, primarily due to the per capita increases in health spending shown in figure 2.
In contrast, combined Welsh expenditure on health and social services per head remains slightly below 2010-11 Welsh levels in real terms. As in Scotland and Northern Ireland however, total per capita health and social services spending was greater in Wales than was comparable spending in England in each year of the five-year period.
Accounting for Austerity
Notwithstanding the problems of comparing and contrasting spending across the countries of the UK, the Treasury’s Country and Regional Analysis data gives us a useful annual look at the divergences and continuities in spending and policy decisions taken by the UK and devolved governments through their budget decisions. With further fiscal consolidation for the next five years likely to be announced in the Comprehensive Spending Review later this month, the Welsh Government elected next May will once again have to decide how far to diverge from spending decisions taken elsewhere to distribute budget cuts across its many areas of policy responsibility.