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Editor's blog Tuesday 22 June 2010: Hello, VAT at 20%; goodbye, cash for National Cancer Drugs Fund

Contrary to some last-minute rumours, VAT goes up to 20% from January 2011 following today's budget.

There is an interesting corrolary side-effect, which is to wipe out the promised £200 million for the National Cancer Drugs Fund.

'Wait a minute', I hear you cry - 'they are stopping the rise on National Insurance for employers to fund the National Cancer Drugs Fund!'

It is the ancient art of the Three-Card Monte.

They got you watching the money - the NI employers' contribution cut - and by slipping VAT up to 20%, the cost to the NHS will be about, ooh, £200 million.

How do we know? By extrapolating from the NHS in Scotland. Figures released in Holyrood by health minister Nicola Sturgeon in response to Ian McKee of the SNP's question show that the rise in VAT to 20% will cost the NHS in Scotland £26.5 million.

The budget of the NHS in Scotland is just over £10 billion. The budget of the NHS in England is just over £105 billion.

Scale up that £26.5 billion cost from rising VAT to NHS Soctland, to an English NHS budget ten times the size, and ... there goes well over the £200 million promised for new cancer drugs - whether they are cost-effective or not.