November 30, 2014 / 11:29 AM / 3 years ago

UK's Osborne pledges pre-election healthcare funding boost

Britain's Chancellor of the Exchequer George Osborne attends a European Union finance ministers meeting in Brussels November 7, 2014.Francois Lenoir

LONDON (Reuters) - British finance minister George Osborne announced a 2 billion-pound annual rise in healthcare spending on Sunday, seeking to counter attacks on his Conservative party's handling of the health service six months before an election.

Prime Minister David Cameron's center-right party lags the main opposition Labour party on the question of who is most trusted to protect the publicly funded National Health Service (NHS).

With opinion polls showing Labour narrowly in the lead on voting intentions, Osborne sought to win back ground on the NHS by promising a permanent increase in the service's funding.

"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," Osborne told the BBC.

He will seek to use a half-yearly budget update on Wednesday to convince voters that his plan for more spending cuts, focused in large part on welfare payments, is more credible than Labour's less aggressive austerity proposals.

Britain's budget deficit remains large, at more than 5 percent of economic output, and Osborne is aiming to balance it by 2018/19 without raising taxes.

The NHS in England costs over 100 billion pounds annually, or a third of all government departmental spending. It faces increasing financial strain as the population rises and ages.

The spending pledge is set to be delivered alongside mixed economic forecasts from the independent Office for Budget Responsibility that, beyond some investment in road-building, will leave little room for other spending commitments.

The Sunday Times reported, without citing sources, that the OBR would raise its 2015 economic growth prediction to 2.5 percent from 2.3 percent. It would also increase its forecasts for the budget deficit, the paper said without elaborating.

Britain's strong economic growth since the middle of last year has not yet translated into stronger tax revenues, since much of a surge in employment has been in low-paying jobs.

When Osborne took office in 2010, he promised to protect the NHS as he set about cutting a budget deficit that had reached 11 percent of gross domestic product.

The head of the NHS in England has said the service faces a 30 billion-pound shortfall by 2020/21 and that even with cost cutting, at least 8 billion pounds of extra funding was needed.

Labour finance spokesman Ed Balls said it was unclear where the extra money promised by Osborne would come from. Labour has promised an extra 2.5 billion pounds of NHS spending, which Balls said would be in addition to Osborne's increase.

Editing by Aidan Martindale

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