Will the Spending Review exacerbate health inequalities?

Tazeem Bhatia examines how universal credit changes and cuts to public spending announced in the Spending Review are likely to have a detrimental impact on health inequalities.

Comment

Published: 02/12/2015

It came as something of a surprise during last week's Spending Review to learn that George Osborne had U-turned on previous plans to cut tax credits. These cuts would have negatively affected 3.3 million low-income working families more or less overnight, so this change of tack is likely to have been warmly received by many - particularly given the likelihood that this could have increased health inequalities across the UK.

However, the Spending Review also revealed further cuts to Local Government. As analysis from the Nuffield Trust has revealed, new funding for the NHS may come at the cost of more cuts to an already fractured public health system. All of which is not good news from a health inequalities perspective.

How do we measure health and health inequalities?

Health is often measured using life expectancy and disability-free life expectancy, and there are clear links between inequalities in population health and disparities in wealth. Health inequalities are preventable, unjust differences in the health status experienced by certain population groups. 

As shown below, although the health of the population is improving, there are still persistent disparities between social groups. For example, a poor British man today will not expect to live as long as a rich British man did 25 years ago. Men living in the most deprived areas of Glasgow can expect to live significantly shorter lives than men in a war zone on the Gaza Strip.

Will the Spending Review exacerbate health inequalities?

02/12/2015

Chart

According to David Cameron, health inequalities in Britain are worse than at any time since comparable national records began in 1921. It took the creation of the NHS and the welfare state to halve health inequalities. However, since the 1980s, these gains have gradually been reversed.

So how might the Spending Review affect health inequalities?

A detailed look at the reforms outlined in the Spending Review suggests that closing the inequality gap is not high on the Government’s agenda: the review admittedly went back on plans to cut tax credits, but pushed forward with cuts to universal credits. Furthermore, a 24 per cent real terms reduction in Local Government grant funding, plus cuts to central Department of Health budgets that include millions of pounds' worth of cuts to the public health system, will all hit the poorest the hardest and increase inequality.

Since 2010, the poorest communities have suffered the consequences of the financial crisis, with reductions in the value of welfare benefits, restrictions on entitlements to support, the introduction of the bedroom tax, and rising costs of food and fuel. The Resolution Foundation analysis of the Spending Review shows that by 2020, the mean income for the bottom half of the population will have reduced, with the lowest quintile becoming about £1,000 worse off each year (5 per cent of their annual income). The same analysis calculated no change for the richer half of the population. 

Local authorities on an uneven footing 

Furthermore, cuts to the public sector over the last five years continue to disproportionately affect local authorities (LAs), particularly those with more deprived communities. From 2010/11 to 2014/15 the additional funding given to LAs serving more deprived populations has reduced from 45 per cent to just 17 per cent extra per head of population.

As a result, there is now little difference between the per capita expenditure in the most deprived and least deprived areas, even though deprived populations have greater needs for services. A recent publication by the Joseph Rowntree Foundation explains how LA resilience to the cuts is under strain and that LAs are now being forced to cut frontline services.

Despite authorities' efforts to protect services for the poorest, cuts are contributing to rising levels of inequality. The policies outlined in the Spending Review giving LAs power to raise funds  like retaining business rate taxes and increasing council tax by 2 per cent  will again benefit well-off areas the most, thereby further driving up inequality.

And there is a social justice case to be made for tackling inequalities over and above these economic arguments. Modelling in the report 'Inequalities in life and death: what if Britain were more equal?' showed that even a modest redistribution of wealth back to levels that existed in the 1980s would reduce premature mortality by 37 per cent. Widening inequalities are not inevitable. A review of historical data has shown that, from the 1930s to the 1970s, social inequalities in mortality declined as the welfare state expanded.

Cuts to the public sector matter. Tackling health inequalities requires investment in the social determinants of health, like employment, wage distributions, living standards and educational opportunities, as outlined in the Marmot Review. We need policies and services that address these social determinants and that seek to improve the health of all social groups in society and work towards reducing the health inequalities.

Suggested citation

Bhatia T (2016) ‘Will the Spending Review exacerbate health inequalities?’. Nuffield Trust comment, 2 December 2015. https://www.nuffieldtrust.org.uk/news-item/will-the-spending-review-exacerbate-health-inequalities

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