Seeing behind the Budget headlines

by Emma Knowles

28 October 2021

For the NHS, the autumn Budget and spending review held few surprises, with spending announcements trailed in the days leading up to the speech. But, as ever, the detail is important. As are the omissions.

The numbers in chancellor Rishi Sunak’s speech came thick and fast. A welcome boost in core resource spending that equates to a £43.9bn increase over the course of the Parliament and a multi-year capital settlement were the only new figures. The new hospitals, the community diagnostic centres and the 50,000 extra nurses have all been announced before. Some more than once.

While the speech bamboozled with numbers delivered at speed against a noisy backdrop, the supporting information is not much clearer.

The additional revenue funding will be welcomed (see Budget confirms increases in NHS revenue and capital budgets). But the baseline that it has been added to, appears to have increased as well. It seems likely that this reflects inclusion of compensation for employer costs of the new health and social care levy, which were kept separate in the earlier figures released in September. And there are new forecasts on the amounts that will be available for health and care since the levy announcement. But the changes are far from transparent.

The three-year capital settlement is clearer and will support improved capital planning with a multi-year settlement. This settlement goes some way to address the concerns raised in an HFMA publication NHS capital - a system in distress around short term capital allocations, but recognition of the long-term nature of some capital projects, is still essential.

However, the number of projects set out by government that require capital investment, means that local systems may have little flexibility to address other needs, or even essential backlog maintenance.

Within the capital funding announced is the £5.9bn previously trailed to tackle the elective backlog. This funding is earmarked to develop surgical hubs, create community diagnostic centres, and invest in digital technologies. All of which is welcome, but capital is never a short-term fix, although it is definitely a welcome one.

A programme of work between the HFMA and Health Education England is supporting NHS finance staff to understand the value of investing in digital healthcare technologies, which will be vital when deciding how to invest this capital funding to best effect. Future work by the HFMA will consider the accounting treatment of such investments and the allocation between capital and revenue funding.

Investment in new facilities is pointless without the workforce to operate them. Yet the chancellor was silent on NHS workforce pressures. The supporting documents state that ‘hundreds of millions’ will create a bigger and better workforce. But how many hundreds of millions and when? If the investment comes late in this Parliament, workforce pressures will continue to be the defining feature of the NHS for many years to come.

And what of social care? £4.8bn of new grant funding for local government over the spending review period is obviously welcomed, but it is for all council services, not just social care. An HFMA and CIPFA roundtable earlier in the year highlighted the estimate by Sir Andrew Dilnot that £10bn is needed just to put social care on a sustainable footing. While it is expected that local authorities with responsibility for social care will be able to raise the social care precept on council tax by 1%, this will do little to address the pressures that the sector faces. The wealthiest areas will receive more funding through this route and those who need it most, will see minimal change.

The autumn Budget and spending review was wide ranging, with funding announced to tackle many areas that have a direct impact on the NHS. £640m was earmarked to tackle rough sleeping and homelessness. Nominally outside of the NHS settlement, but directly relevant, £300m was allocated to deliver parenting programmes and support perinatal mental health. Funding for youth services, education, sports facilities, and school holiday food programmes will all work to support population health and wellbeing. Investment in each of these areas will also support efforts to tackle health inequalities, through addressing some of the wider determinants of health. We are supporting our members to understand the NHS finance role in this task.

The breadth of the spending review should have a bigger, positive, impact on health and social care than just the Department of Health and Social Care allocation alone. This is just as well, given the ongoing pressures that the whole sector faces.