Call for short-term hospital spending rise but transformation vital to sustainability

Chancellor Philip Hammond is due to announce his Budget on 22 November. Performance tracker, a new report from the institutes, examined 100 data sets across nine public services. It said the data showed the government was being forced into poor and reactionary spending decisions in hospitals, prisons, schools and adult social care.

In the hospital sector, for example, the government had allocated an additional £1.8bn through the sustainability and transformation fund (STF) in 2016/17, yet the sector had ended the year with a £791m aggregate deficit. Despite the same sum being allocated this year, official estimates forecast a deficit of around £500m. 

The Nuffield Trust has suggested that the underlying deficit – stripping out temporary funding increases such as the STF and one-off savings – at the end of 2016/17 was much higher, at £3.7bn.

While overall Department of Health spending grew by 2.1% in 2016/17, spending on the hospital sector increased by 4.3%. This was funded by restraining growth in other parts of the health budget, including prescribing, while spending on primary care and public health was broadly flat, the report said. 

With demand rising and targets missed despite increased funding, the government had to raise hospital spending, the report said. There was little scope for manoeuvre in the upcoming Budget, but to stop hospital funding climbing ever higher, the service transformation promised by sustainability and transformation partnerships must be realised.

And on pay rises above the 1% cap, it said that before increasing pay the government must clarify the problem it is trying to solve. If it is recruitment and retention, pay rises could be a good solution. But if it is looking to pay more to reward greater workload at the expense of hiring more staff, the issue could be exacerbated.

CIPFA chief executive Rob Whiteman (pictured) said: ‘Government must go beyond moving from one reactive cash injection to the next, because this fails to assess sustainability of many public services. It may now be more effective to stop some services than see them collapse. 

‘The choices facing the chancellor are limited, but government must do better at medium to long-term financial planning using one set of robust numbers that underpin policy assumptions and budget allocations. 

‘This requires an honest assessment of current performance and what is affordable, with higher spending in some areas.’

Saffron Cordery, NHS Providers’ policy and strategy director, said the tracker was right to highlight high levels of patient satisfaction. 

She added: ‘However, growing numbers of patients face unacceptable delays for treatment. Despite the best efforts of NHS trusts and their staff, financial pressures and workforce shortages are having a growing impact on the quality and safety of care. 

‘The report calls for an honest assessment of what can be delivered within current funding constraints. We couldn’t agree more.’