Challenge remains despite Budget increase

by Steve Brown

01 November 2018

NHS faces major challenges despite confirmation of multi-year NHS settlement

This week’s Budget was dominated by the NHS, without really telling us very much more than we already knew. It confirmed the summer announcement of a £20.5bn real-terms increase for the English NHS over the next five years (with consequential increases for the devolved administrations in Scotland, Wales and Northern Ireland). This increase is hugely welcome given the demand pressures facing the service currently. But we cannot pretend that it will enable the NHS to address all the significant challenges that face it.

The promise to ringfence more than £2bn of this funding for mental health is also welcome – although we will need to see more detailed figures to understand how much this will really increase mental health funding as a share of the overall NHS budget. The increase in share looks as though it is marginal, however the intention to provide some financial backing to the commitment to achieve parity with physical health services is the right one.

Failure to invest in mental health services has also increased pressure on acute services and A&E in particular. Boosting mental health funding is the right thing to do for patients and will lead to more efficient and effective use of appropriate services. However, the commitment to increase mental health resources does not make up the shortfall that has built up in funding over recent years and there is still a long way to go in delivering the commitments set out in the Five-year forward view for mental health.

The HFMA is currently working with mental health providers to understand progress in this area and will produce a briefing later this year (Mental health providers can complete a survey here).

Other news came with the announcement that the private finance initiative – and its more recent incarnation as PF2 – will no longer be used as an alternative to public funding for new capital projects. Given the collapse of Carillion and the termination of its two major hospital PFI schemes, this cannot be described as surprising.

The Naylor report was clear that private capital (at least for primary care) was one of the sources of an estimated £10bn NHS capital spending requirement – along with Treasury funding and property disposals. And chancellor Philip Hammond says he remains committed to public-private partnerships where they deliver value for money. So, we need to understand the models that he has in mind.

The HFMA's recent briefing – NHS capital: a system in distress? ­– underlines that capital investment is fundamental to the transformation of the NHS and the establishment of new models of more integrated care.  And as HFMA policy and technical manager Debbie Paterson said in a recent blog, more capital funding is clearly needed, but we also need to revamp the process used to allocate scarce resources within the limitations of the Department of Health and Social Care’s capital departmental expenditure limit.

We must wait, it seems, for next year’s spending review to hear whether the government will support proposals for a multi-year capital plan.

Perhaps most disappointing in the Budget was what we didn’t hear. There was additional funding for social care, but it fell far short of what is needed to enable councils to meet the needs of their local populations. And failure to properly fund social care will continue to have a knock-on impact in the health service. This will leave patients, who are fit for discharge, stuck in hospital awaiting assessment and the arrangement of a suitable package of support and will increase demand at the front door too.

We need to see this situation addressed in the forthcoming government green paper and backed up with the necessary funding in next year’s spending review.

What is completely clear is that, despite the confirmed funding increase for the NHS, the challenge remains significant. There is a good consensus around how services need to change – developing more proactive responses to support people in the community and avoid unnecessary hospital admissions. The NHS needs to embrace the potential of new technology to help it develop new ways to support communities. And it needs to massively increase its focus on prevention.

The Budget rightly confirms the NHS as a relative priority for the government among other spending options. The service should acknowledge this as a step in the right direction. Then it needs to quickly get back on with the job of meeting day-to-day pressures, recovering its financial position and making progress on those new models of care.