Spending review must complete job on health and care funding

17 June 2019 Steve Brown

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Previously announced spending plans will see NHS England’s budget increase in real terms by £20.6bn by 2023/24 – an average increase of 3.3% But with relatively bigger increases for mental health services (4.6% a year) and community health services (3.8%), acute services will face major challenges in meeting the needs of a growing and ageing population with increasingly complex health needs.Jennifer Dixon

Acute hospitals' inpatient and outpatient care rose by 3% a year on average between 2010/11 and 2016/17, with growth of 3.6% in 2016/17 alone. According to a Health Foundation report, without any improvement in the quality or range of services, acute and specialist hospital activity will need to rise by at least 2.7% per year over the next five years just to keep pace with demand. However, long-term plan funding would only be sufficient for activity growth of 2.3% per year – implying a need to ‘significantly moderate growth in demand for hospital services’.

The foundation added that the amount of activity that could be undertaken within a given budget was dependent on pay. While lower pay growth beyond the current Agenda for Change deal would allow higher activity growth, there was little scope for this given current recruitment and retention challenges.

Failure to moderate growth in demand for hospital care would threaten the promised additional investment in mental health, primary and community care. The phasing of the planned investment also adds difficulties – with the backloaded funding increases making it harder to invest in new service models.

A survey by the NHS Confederation has also revealed that frontline NHS leaders are not confident that they will be able to reduce the rate of growth in demand. Funding cuts to social care and public health are undermining attempts to keep people well and out of hospital. Workforce issues are also top of leaders’ list of concerns – with shortages in mental health nurses, psychiatrists, GPs and community nurses in particular.

The Health Foundation said that to maintain current levels of quality and access over the next five years, the total healthcare budget would need to increase by 3.4% - requiring workforce, capital and public health budgets to increase at the same rate as frontline services. However, it said there was a strong case for rebalancing day-to-day spending and longer term investment, which would mean increasing the total health budget by 4.1%.

In terms of investment in buildings and equipment, increasing UK spending on healthcare capital to the average of countries in the Organisation for Economic Co-operation and Development (OECD) would require the Department of Health and Social Care’s capital budget to rise from £5.9bn in 2019/20 to £10.3bn in 2023/24.

Meanwhile a £900m investment in Health Education England’s budget would allow national investment in workforce development to return to previous levels. Simply reversing cuts in the public health grant would increase the provisional allocation for 2020/21 by £1bn to £4.2bn. Growing it inline with NHS England’s budget would require a £1.5bn a year real-terms increase by 2023/24.

All these broader health budgets are dependent on the outcome of the spending review, which now seems likely to be delayed.

Social care funding will also play a major part in the health service’s ability to cope with demand. The long-term plan was developed with the expectation of a sustainable settlement for social care. With no action on funding, money for adult social care will rise at an average of just 1.4% a year. The Health Foundation warned that this would lead to a social care funding gap of £4.4bn in England in 2023/24 just to meet rising demand and address critical staffing shortages.

Jennifer Dixon (pictured), chief executive at the Health Foundation, said the long-term plan set out the right vision and the funding already announced was welcome. ‘But this is not job done,’ she said. ‘Policymakers need to face the fact that there is urgent unfinished business if the NHS is to deliver its vision to improve patient care.

‘There are mounting workforce shortages, the social care system is starved of funding, capital investment is going backwards, and public health funds cut,’ she added. ‘This all piles demand on the NHS and risks swallowing up the extra money and leaving far less to modernise care, reduce waiting times, and prevent illness in the first place.’

Niall Dickson, chief executive of the NHS Confederation said that while leaders were optimistic about the future, they also had serious concerns. ‘They face crippling staff vacancies, rising demand for care, lack of investment in buildings and equipment, and the drastic cuts to social care and public health that are fuelling extra demand on A&E and other front-line NHS services,’ he said.

If this was not addressed in the next spending review, it would ‘put the ambitions of the NHS plan in jeopardy, and patients will not feel the full benefits of the extra £20 billion of funding’.