The BMA said in reality billions of pounds were being handed back to the Treasury each year along with £20bn of efficiency cuts coming mostly from erosion of staff pay.
In his annual economic statement Mr Osborne said health service funding would continue to be protected from departmental spending cuts.
Despite claiming the economy was in recovery and expected to grow 14% this year, Mr Osborne called for continuing austerity.
'The government must ensure that debt continues to fall as a percentage of GDP, including using surpluses in good years for this purpose,' Mr Osborne told MPs. 'In other words this time we will fix the roof when the sun is shining.'
GPs could face continued pay restraint beyond 2015 after the chancellor’s statement said ministers must ‘continue to reform and take tough decisions on public sector pay’ into the next parliament.
Mr Osborne brought forward the date when the state pension age rises to 68 to the mid-2030s, and it could rise further to 69 by the late 2040s. Following previous reforms, the age at which NHS pension benefits can be claimed is linked to the state pensions age.
BMA chairman Dr Mark Porter said NHS staff were working harder than ever and facing real-terms pay cuts. ‘While the government claims the health budget is protected, in reality billions of pounds are going back to the Treasury each year and the NHS is also having to make £20bn in efficiency savings, the bulk of which is coming from the continued erosion of staff pay.
‘This is simply unsustainable,' he said. ‘The combination of an overstretched workforce, a fall in real-terms pay and the fact the government keeps moving the goalposts on pensions meaning doctors face working until they’re 70, has left morale in the NHS at an all-time low.’
RCGP chairwoman Dr Maureen Baker said the statement was a missed opportunity to address the general practice funding crisis.
‘NHS funding was completely overlooked and family doctors are gravely concerned that patient care is being compromised by declining resources’, she said. ‘The government needs to invest in general practice as a matter of urgency.’