Spending review: NHS budget up just 0.1%

However social care has received a £2bn boost from the coalition's spending review.

With NHS spending set to rise from £104bn this year to £114bn by the end of 2014/15 this equates to approximately a 0.1% increase above inflation.

Despite upholding its promise, the NHS will still be subject to a targeted £20bn of efficiency savings, demands of higher productivity, and with medical inflation running far higher than consumer inflation, it is likely the squeeze will be felt further.

Making the announcement, Chancellor George Osborne said that the government had deliberately chosen to protect the NHS, although it was not immune to current financial situation.

"That does not mean we are letting the health department off the need to drive forward real reform and savings from waste and inefficiency," he said.

"Productivity in the health service fell steadily over the last ten years, and that must not continue. By 2014, we are aiming to save up to £20bn a year by demanding better value for money. But the money we save will be reinvested in our nation's health care.

"As the independent forecasts we published in the Budget show, we need to make these savings to deal with our ageing population and the rising costs of new medical treatments," he added.

There was some good news for the NHS as it was announced that spending on health research is to be protected, access to psychological therapies for the young, elderly and those with mental illness will be expanded, and a new cancer drug fund was confirmed.

Local governments will receive an additional £1bn by the fourth year of the spending review for social care, with a further £1bn provided through the NHS to support joint working with councils.

This is, Osborne explained; "so that elderly people do not continue to fall through the crack between two systems.

"That's a total of £2 billion additional funding for social care to protect the most vulnerable," he added.