The baseball player Yogi Berra once said, “when you come to a fork in the road, take it.”
A similar sense of strategic confusion and indecision has pervaded NHS funding in recent years, as the Treasury first sets firm budgets for the NHS and then finds itself topping these up in drips and drabs as pressures on services mount. The prime minister’s announcement of a new long-term funding package for the NHS now provides an opportunity to reset this approach, and give some clarity over the resources the NHS will have to work with over the coming decade.
But why was a new approach needed in the first place? Our recent review of national data shows that although the NHS continues to make substantial efficiency improvements, it is buckling under the pressure of rising demand and austere funding. Hospitals are full, with 90 per cent of beds now regularly occupied, well above the 85 per cent threshold generally considered safe. Staffing vacancies are rife, with nearly 100,000 posts waiting to be filled. And all this against a backdrop of relentless increases in the need for care as the population grows, and lives longer with a range of conditions.
The inevitable consequence of this mismatch between demand and available resources has been lengthening queues for accessing care. There are 4.2m patients on hospital waiting lists—the highest level in 10 years. National targets for seeing patients quickly in major A&E departments in hospitals have not been met for four years. And frontline providers of NHS services reported a financial deficit of nearly £1bn last year. Little wonder then, that after another punishing winter in which the NHS dominated the headlines, a change of direction was needed.
So, what do we know about the funding package that was announced? We know it is a long-term offer that covers the next five years, from April next year to the end of 2023/24. There is also a substantial sum of money, with day to day NHS spending rising £20.5bn over this period, a rise of 3.4 per cent each year in real terms. The government has floated a number of ways of finding this, including the controversial "Brexit dividend." The Chancellor’s recent Mansion House speech makes clear that taxes will rise to support this funding boost—something our previous polling research suggests the public would support.
But there are also some known unknowns in the offer. Key elements of health care spending may not be fully covered by these rises. These include capital investment in buildings and equipment, staff training budgets and funding for some public health services. There is clearly some unfinished business then for negotiations in the run up to the Autumn Budget and Spending Review.
But the most significant piece of unfinished business lies outside the NHS. If there was an elephant in the room when the deal was struck between Jeremy Hunt and the Chancellor, it would surely have “social care” written on its side. The last decade has demonstrated the foolishness of treating health and care as if they are anything other than interrelated systems whose fortunes fall or rise together—a point reflected in responsibility for the forthcoming social care green paper moving to a newly named Department of Health and Social Care. For this reason, social care and community services were among the top priorities for further investment in our recent survey of NHS finance leads, but we will have to wait until next year’s Spending Review before the fate of social care will be determined.
So, the ball is now in the NHS’s court to develop a detailed 10-year plan that will set out what can be achieved with this initial five-year funding boost. It will not be an easy task. The need to recover the strong waiting time performance of the past must be balanced against the need to invest in new technologies and ways of working that will transform how care is delivered in the future. The lack of available staff will limit the rate of improvement in NHS services despite the additional funding. And most importantly, a sense of realism over what can be achieved is needed—especially as the 3.4 per cent increases are below both average historical rises in the NHS budget, and the 4 per cent rises The King’s Fund and others believe are needed to maintain and transform care.
And a final reality check is this—the money on the table is not a “settlement” or a “deal,” it is an offer contingent on the NHS developing a credible and deliverable plan. Even if it is unlikely that the government can backtrack on the offer now, it does mean there is still plenty of arm wrestling to do in the Autumn Budget and Spending Review to square the ambitions of ministers with what NHS leaders think is realistic. Uncertainty in NHS funding—for the time being at least—still reigns. Or as Yogi Berra would say—“it’s tough to make predictions, especially about the future.”
