Reading between the lines: five thoughts on NHS funding in the Budget

Expectations of a generous Budget settlement from the Chancellor were low from the outset, given his reputation for fiscal caution and an economy that has been creaking in recent months. The ominous growth forecasts from the OBR did nothing to add to this hope, and the NHS ended up being one of the key beneficiaries among public services.

The key figures were an additional £2.8 billion for NHS revenue spending over the next three years and an immediate injection of £350 million for winter pressures, as well as £3.5 billion in additional capital funding over the course of the parliament. The good news for the sector is that this is new money, rather than being recycled from existing budgets– but the ultimate verdict is that it falls short of what the NHS needs. Here are five thoughts on what the NHS’s funding settlement in the Budget really means.

Don’t get too excited

The challenge with the NHS’s funding settlement to date was that it was on course to receive funding increases as small as 0.4% over the next few years, which would actually equate to a fall in spending per person next year. To ensure that the Conservatives met their manifesto commitments to increase NHS funding per person for each year of the parliament, the Budget needed to increase the funding settlement by £314 million for 2018/19 and £231 million for 2019/20.

The Budget’s announcements do go beyond this – there will be increases of £1.6 billion and £900 million respectively during these years – but a recent joint publication from the King’s Fund, Nuffield Trust and Health Foundation concluded that £4 billion extra is needed next year alone. The Health Foundation has now warned that even with the funding announced, “the NHS will be under considerable pressures” and will “still face big challenges.” So, the bottom line is that while the Government can troop out headlines about how much it’s increasing NHS funding by over this parliament, far more would be needed to help NHS chief executives to sleep better at night.

Continuation of short-term thinking

One of the other issues with the funding settlement is that it will clearly only support services in the immediate future, rather than facilitating long-term change. Despite sustainability and transformation being the current NHS mantra, this funding will likely only just stop existing services from toppling over, without allowing for a comfortable financial position that would allow healthcare leaders to implement new ways of working that would have substantial future benefits. The timing of the £350 million of funding to deal with winter pressures has also been criticised by organisations such as NHS Providers, given that winter begins in… nine days. Planning to spend this amount of money takes time, and the Government has not gifted the NHS with that time.

Keeping capital in the spotlight

Capital has been a buzzword in health in recent months, following the publication of the Naylor Review of NHS property and estates and its recommendation that £10 billion is needed to redesign existing facilities and build new ones. Phillip Hammond has endorsed this recommendation by finding £3.5 billion from the Treasury. The Government estimates that £3.3 billion more can come from selling surplus NHS land and buildings, while an as yet unspecified amount will come from private sector investment.

This will be certainly be welcomed by GP practices and hospitals struggling with outdated buildings, but would have more impact if the NHS hadn’t already diverted billions of pounds of capital funding to the revenue budget in recent years, creating a maintenance backlog of more than £5 billion. The capital funding allocation also reinforces the importance of STPs, as £2.6 billion of the £3.5 billion from the Government will be allocated through a multi-year programme of capital transformation for STPs.

The elephant in the room

While the Government announced last week that it will publish a green paper by summer 2018 outlining its proposals for reform of the social care sector, discussion of social care was entirely absent from the Budget. The implications of this for the health sector are noteworthy: allocating £335 million can only go so far towards relieving winter pressures if the social care sector cannot prevent bed-blocking or A&E admissions among older people. The Local Government Association was quite clear in its conclusion on the Budget, stating that “It is a completely false economy to put money into the NHS while not addressing the funding crisis in adult social care. This sends a message that if you need social care, you should go to hospital.”

Not enough to keep the sector or voters on side?

The ultimate aim of this Budget was to prove that the Conservatives care about the concerns of ordinary voters, bringing them back from Labour who swayed the outcome of the election by running on a platform of improvements to public services. While Conservative MPs are relatively happy with the Chancellor’s decisions, when reading between the lines they might not manage to convince the public of their achievements in the long run. Allocating £3 billion to a Brexit preparations fund rather than healthcare funding will not sit well with voters who are bored of Brexit, but are worried about their local GP practice or A&E department. The Conservatives need to press home these figures on NHS investment if they are to regain the high standing they had on the NHS at the beginning of the year – but reality checks coming from health commentators and NHS leaders are likely to prevent this restoration in the foreseeable future.

The Whitehouse Consultancy is hosting a panel event on STPs, and how the changes that they propose can be communicated to the stakeholders affected. To find out more and information and register to attend, please click here.