Funding the NHS – Budget 2017: Time to Act
The NHS confederation has been warning the government of the consequences of failing to adequately fund the NHS and social care. The Autumn Budget provided a golden opportunity for the government to tackle the growing crisis in these services in England.
The NHS Confederation has 8 top priorities:
- Revisit the NHS funding settlement for 2018/19 and 2019/20 and increase it by at least £4b each year.
- Commit to an NHS funding target
- Establish an office for budgetary responsibility for health
- Renew the commitment to transformation with additional ring fences transformation funding of £2b for 2018/19/2019/20
- Deliver on the commitment to provide the necessary capital funding for the NHS
- Commit to fully funding the relaxation of the NHS pay cap.
- Create an NHS homes fund
- Maintain the current level of funding for the better care fund and develop a long-term solution to social care funding
Following the autumn statement, the NHS gained an additional £2.8billion of revenue funding. This is funding for the day to day running of the NHS; patient care, cleaning, medicines, staff salaries, consumables. In additional, the chancellor also gave an additional £3.5 billion for capital investment. That is money for buildings and equipment.
Finally, the chancellor also announced that there would be money for the pay awards, above the current 1% public sector pay cap.
Funding the NHS – And so to the detail:
Health spending across 2018/19 was set to increase at a rate of 0.5%. That is the lowest of this parliament and in real terms means that spending per head of population is actually falling by 0.2%. The chancellor acted and gave an additional £337m for winter pressures, however, as has been pointed out, what is the tangible difference that can be made, with this amount of money, this late in the year?
Despite the increase for winter pressures and a guarantee that the public sector pay rises will be honoured, social care failed to gain any additional funding from the autumn statement, leaving this sector out in the cold, and this despite the growing need for a joined-up health and social care system.
The Organisation for effective cooperation and development (OECD) suggest that the demand placed on our health and care systems is not unduly pressurised by the ageing population compared to other European countries. We do better than most as the UK fertility levels are better than our European counterparts, however, where the UK does suffer more than our European cousins is related to our productivity levels. For what Europe can produce in 4 days, it takes UK 5 and that continues to have a detrimental effect on our economy. This is further hindered by the lack of capital investment into our health and care sectors. The last 10 years have been the worst in terms of productivity growth since Napoleonic times.
As we see limited investment in capital spend, our ability to be productive continues to fall. Underfunding of capital equipment means, it is harder for the people on the ground to do the work. A simple x-ray or MRI scan, that should take minutes or a few hours is taking days, weeks or even months. As appointments are cancelled due to failing equipment, waiting lists escalate and staff on the front line are spending their time trying to find alternative sites and means to treat patients.
It seems sensible to plan for productivity growth of 1.2% but we really don’t know at this stage the true implications of Brexit. 1.2% growth in productivity rates, pre-Brexit, is the lowest across the G7 countries and could be far lower after we leave the European Union.
So why is productivity in the UK so low?
Europe can produce goods in 4 days compared to our 5. We are comparable in the high-tech industry sectors, however, where we are not competing is in sectors where we have failed to invest in, such as our health sector and this is largely due to the limited investment in capital equipment which results in the inability to carry out the work in an agreed time period.
The UK has a large sector of low skilled workers, again this has a detrimental effect on productivity. Finally, there are a lot of structural issues within our workforce, none more so than in the healthcare sector:
The NHS has seen a 26% increase in the number of medical consultants over the last 10 years and just 1% in the number of nurses.
The productivity of consultants has reduced and capital investment has increased by just 3% over this period of time with a 47% decrease in investment in equipment.
A lot of zombie firms have gone out of business, which has had an effect on productivity
In addition to the bleak review regarding our productivity growth, it is anticipated that it will take a total of 17 years before we are able to return to pre-crisis peak and see wages rise. That is 2025 before any earnings growth.
Regarding the current austerity plans, it is estimated that it will be 2030 before the NHS can finally balance the books.
So, what did the budget give the NHS:
The NHS did get £3.45B of new capital from the treasury. Most of this money will go to the STPs and turnaround work programmes.
£3.3b capital asset disposal. However, most of this will come from London and will therefore stay in London. Does this mean that London does not get a share of the £3.4 b capital investment? This has not been confirmed.
Pay: The Chancellor has committed to funding the public sector pay rises and has stressed that this is linked to productivity, which will be inherently difficult to measure, especially with such limited funding in capital equipment.
Access to new medicines: Access to new medicines is going to become very difficult. Back in 2010 there was a relatively low number of new entities entering the market. In 2018, the NHS is expecting over 100 new molecules with a significant number of these for treatments of cancer. The Cancer drugs fund is already being squeezed and even with NICE, there is no guarantee that ICS /ICO/CCG’s will be in a position to fund new treatments.
Social care- Houston we have a problem: We already know that there was no additional funding for social care in the autumn statement. What is also clear is that the funding gap in adult social care is getting wider. In two years’ time there will be a funding gap of at least £2.5b in adult social care.
It appears that the public health budget has had an increase, which on the surface looks like a positive step in the right direction. However, this has come about as a result of the money invested in the under-five year olds moving across to the public health budget, resulting in real terms, in a reduction in the PH budget! This at time when we need to invest in prevention.
Universal credit changes further exacerbate the problems with adult social care. The changes being made to universal credit actually means that those people in the 2nd lowest income bracket in England will see a £900 per year drop in their income!
All of these problems in the NHS and across social care are not one-off problems and short-term fixes inherently cause longer term problems.
Some other key facts:
The budget did give the NHS an additional £8b of funding, but hidden behind this is the fact that in real terms this is £4b, as the changes in education take out £4b. NHS E now holds the budget for junior doctors training, before this came directly from the Education budget!
The number of people turning up at our A &E departments is not the issue, it is however, the number of people converting to admissions with multiple co-morbidities, which is the problem.
There are over 100,000 more >65yrs in the population and there is a 10% shortage in the number of nurses we need and this is before Brexit. We have already seen a 90% fall in the number of EU nurses applying to the UK for nursing posts. (FTW). On top of this, GP numbers are 5% down over the last 2 years (FTE) with those leaving the service pre-retirement age continuing on an upward trend.
Summary by Paula Varnell-Dawes
Factual information provided by the NHS Confederation. The NHS Confederation is the authentic voice of NHS leadership and is the only membership body that brings together, and speaks on behalf of, the whole health and care system.