Health and social care reforms: What next for the NHS billions?

A recent report from the Institute for Fiscal Studies shows that the NHS has gobbled up an ever increasing proportion of public funding rising from 13 per cent in the late 1970s to a projected 28 per cent of government spending in 2014/15. Even as the NHS increasingly dominates public spending, the growth rate of health spending will itself remain tiny into the foreseeable future.

The debate will therefore also shift to which area gets how much of the pie. The decision to reduce the weight given to disability-free life expectancy in the NHS allocation formula led to a debate in the media on how money is moved between north and south and between poorer and wealthier areas. (In reality, there was less to this than meets the eye, since the shift in weighting in the long run is unlikely to come about any time soon.) 

However, this change to the formula does seem to signal a real change of intent. It is consistent with the government’s plans to progressively shift responsibility for reducing and preventing health inequalities away from the NHS and towards local authorities. Behind the scenes, the Department of Health is currently wrestling with how to allocate this ring-fenced money it has pledged for public health to local authorities when, in practice, there is very poor systematic information on how much is in the pot and who is spending what (as is made abundantly clear from David Nicholson’s Dear Colleague letter asking the NHS for more information by the middle of September).

But an even bigger change to allocations lies on  the horizon. From April 2013 the responsibility for making the decisions on spending £80 billion of public money will pass to the NHS Commissioning Board, £60 billion of which it will decide how to pass down to clinical commissioning groups. Under the current system, some may worry about the potential for politicians to fiddle the numbers provided by the Department’s independent advisers, the Advisory Council on Resource Allocation (ACRA), but at least their decisions on allocations are transparent and open to scrutiny, if not consultation. Politicians are also directly accountable to us as voters, however imperfectly and indirectly.

There is no guarantee that the Board will allocate on the same basis as politicians have done, or that it will use ACRA (or a similar independent body) to inform its decisions. There will certainly be some guidance expressed through the Board’s mandate from the Secretary of State, but this is unlikely to be highly detailed – otherwise why give away the power to allocate?

The real questions on NHS funding are therefore set to move on from whether a commitment to real funding increases has been broken to who gets what and critically – in the context of such a large and growing share of public spending – who do we really want to make those decisions?

For more on NHS reforms, visit our Health and Social Care Bill project pages.