George Osborne confirms extra £2bn for NHS

George Osborne has told the BBC he will put an extra £2bn into frontline health services across the UK.

The chancellor said the money was a "down payment" on a plan drawn up by NHS bosses calling for an extra £8bn a year above inflation by 2020.

He said he could make the commitment because the economy was strong.

Labour said the re-organisation of the NHS had created a crisis and accused Mr Osborne of making billions of pounds of unfunded spending commitments.

Shadow chancellor Ed Balls said Labour would commit an extra £2.5bn above Mr Osborne's plan adding that the NHS was "in real crisis".

Mr Osborne's pledge - to be officially announced in his Autumn Statement on Wednesday - comes after NHS England bosses warned of a need for an extra £2bn funding this year, to cope with immediate, unprecedented pressure on NHS budgets.

The chancellor told BBC One's Andrew Marr Show: "Because we have a strong economy and we've got the public finances under control, we can afford to put £2 billion into the frontline of the NHS across the United Kingdom.

"I can tell you we can go further and use those fines that have been paid by the banks for a permanent improvement in GP services.

"This is a down-payment on the NHS's own long-term plan and it shows you can have a strong NHS if you have a strong economy."

Further details are expected on Wednesday when Mr Osborne will update Parliament on his tax and spending plans, based on the latest predictions for the economy.

He rejected claims public services would suffer if funding was cut further and said he would outline how the UK would "stay the course to prosperity".

"We shouldn't face this false choice of either bankrupting the country or having decent public services," he said.

But he added that "difficult decisions" might lie ahead on welfare - possibly freezing working age benefits, although he appeared to rule out cuts to pensioners' benefits.

Health Secretary Jeremy Hunt will make a statement on Monday, in which he is expected to explain where the extra £2bn for the NHS is coming from.

Analysis

By Louise Stewart, BBC political correspondent

For months, NHS leaders have been warning politicians about a growing shortfall in their budget. Today the message from the chancellor was that he's heard their call.

So where will the money come from? Of the £2bn - around £1.3bn of it is new money - the Treasury said it would be found from savings in other government departments. The remaining £700m will come from the existing Department of Health budget and will be put into front line.

The Liberal Democrats are keen to take credit, saying they've fought hard to secure it. Labour say they want to go further and have pledged £2.5bn a year to be spent on the NHS, on top of today's announcements, paid for by a so-called mansion tax and other tax crackdowns.

NHS funding is going to be one of the key battlegrounds ahead of the next election but with figures due out this week expected to confirm that government borrowing is not coming down in line with the Treasury's plans, all parties will face tough questions about how they can increase spending without increasing borrowing yet further.

It is understood that around £1.7bn will go to NHS England, with the remainder going to the devolved administrations, if they wish to spend it on extra health resources.

And it is thought that £1.1bn will be spent over the next Parliament from fines levied on banks for their attempted manipulation of foreign exchange rates.

Mr Hunt will also announce that the government is committed to implementing the five-year plan - NHS Forward View - unveiled by six national bodies last month. Many of the measures put forward are designed to curb the rise in hospital admissions and the impact of the ageing population.

The plans involve increasing spending on the health service in England by £8bn a year in real terms by 2020.

Simon Stevens, chief executive of NHS England, who drew up the proposals, said they had made the case to the chancellor that services were under pressure and "genuine new investment" was needed.

"Of course there will still be pressures and difficult choices, but the government has played its part and the NHS will step up and play our part too. Today represents an extremely welcome vote-of-confidence in the NHS' own five year plan." .

Shadow chancellor Ed Balls blamed the Conservatives for causing a crisis in the NHS through its re-organisation and questioned whether the money would be "an actual long-term investment in the nurses and doctors we need".

He said it was a "typical Tory pattern" of a "winter crisis, and crisis money coming after it".

Mr Balls said Labour's proposed 'mansion tax' on properties worth £2m and over would raise the money to invest £2.5bn "over and above" the government's spending plans into the health service, although he later he told BBC Radio 5 Live's Pienaar's Politics: "If he is doing it through a 10% cut in child benefit, then I will have to think again."

Labour had called for an extra £1bn next year, paid for by banking industry fines.

The Conservatives' coalition partners, the Liberal Democrats, had called for an emergency injection of £1.5bn and a party spokesman said they had "fought to make sure that extra funding for the NHS next year is in the Autumn Statement".

"The easy choice would have been to put off this decision until after the election for the next government to deal with, but that would have betrayed patients. The NHS needs this money urgently and we have acted in the national interest to make it a priority."

Paul Johnson, of the Institute for Fiscal Studies think tank, told the BBC that Mr Osborne would have to admit on Wednesday that the deficit would probably be "a bit higher" than had been predicted in March because of "relatively poor" earnings growth and other tax receipts.

He told BBC1's Sunday Politics programme that by 2018 there would have to be big cuts to other public services including local government and police.