Looking ahead to the Spending Review

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The hotly anticipated results of the Spending Review for 2020/21 are to be announced soon, with the three-year time-frame reduced to one year due to Brexit. For the health and care system, the outcome will be critical.

The four greatest areas of financial need are well rehearsed – and I think it’s fair to say most people in the sector would agree on them, even if the order of priority may vary: adult social care, public health, the health and care workforce, and capital (which has had its own one-off boost this year).

These key areas require immediate investment if the current impact of unmet and under-met need on people is to be reversed, if we are to help prevent or delay illness and disability and if we are to have a workforce and estate that is suitable and adequate for health and care. They are also all critical inputs into the transformation envisaged by the NHS long-term plan – to deliver the long-term plan, Simon Stevens has said he needs social care to be funded at level high enough to ‘not harm NHS’, but at an evidence session with the Health and Social Care Select Committee in February, he was unable to put a number on what that would be.

Even if we cross all our fingers and toes and the genies in the Treasury lamp grant our financial wishes for 2020/21, there are still serious ahead issues for the health and care system because of its spending framework. Delaying the full, multi-year Spending Review until 2020 poses real risks to the delivery of the commitments in the NHS long-term plan and the day-to-day performance of the NHS. Decisions on workforce (including the hotly anticipated People Plan) and on capital spending have already been delayed because they lack the longer-term spending envelope that benefits the rest of the NHS and a spring Spending Review will be too late for the NHS planning round for 2020/21.

Misaligned financial cycles across interdependent services could make collective planning as one system a bit of a nightmare. This matters because the lack of certainty across the system inevitably means that the potential value of the £20 billion to the NHS will in reality be lower, as the NHS can’t yet rely on the rest of the system to the degree initially hoped for. This isn’t the fault of the rest of the system – it’s the consequence of a partial spending settlement that leaves different services planning on different time scales.

In 2020/21, NHS England will be entering the second year of five years of funding certainty, but services and inputs which are critical inputs into, and dependents on, that NHS budget will be facing a year with only one year of funding certainty.

For social care, the spending review may see yet another sticking plaster offered to local government – who will have to juggle their statutory responsibility to have a balanced budget with their responsibilities to ensure provision of adequate services under the Care Act. The financially alert among you will no doubt know that adult social care has always been funded somewhat separately from the rest of the health and care system – at best it’s only ever had small amounts of funding come direct from the Department of Health and Social Care, with most of its funding coming via the Ministry of Housing, Communities and Local Government.  But it has normally at least had the same financial planning horizon as the NHS, aligned to multi-year Spending Reviews.

Delaying the full, multi-year Spending Review until 2020 poses real risks to the delivery of the commitments in the NHS long-term plan and the day-to-day performance of the NHS.

This misalignment between different parts of the system would be challenging enough for partners to make commitments about transformation of services given they don’t know what the future holds for their financial position beyond March 2021. But the nature of the areas outside of the five-year settlement make this challenge even more pronounced. To genuinely be effective and good value for money, capital and workforce spending need more than annual budgets – you don’t start a medical training pipeline with only one year’s funding in the bag, when that funding could end with students part way through their courses. Nor can you start large scale rebuild programmes across your hospital estate – when those programmes take multiple years.

The expectation that some parts of the service will plan with one year of financial certainty and others will plan with five years of certainty shows the real challenges involved in giving a long-term spending settlement based on only part of a department’s total departmental expenditure limit (which covers the necessary costs for all the department’s responsibilities). How can a department – and a complex interdependent delivery system – plan effectively when only some of its functions have certainty of funding beyond one year? We seem to have stumbled into a model which would be broadly akin to setting a school’s budget and curriculum for maths and English for five years, but only for one year for science, history and geography – and still expect the school to function properly.  While Matt Hancock may consider this approach a ‘historic oddity’, it is far from it.  Ringfencing and resolving NHS England’s budget for spending plans without the rest of the system is a recent phenomenon, introduced in 2015 and widely criticised at the time given that these problems of misalignment were entirely foreseeable. It would be entirely feasible to revert back to financial planning on the basis of the health and care system in order to overcome these issues.

When the numbers start to be thrown around at the Spending Review – bear in mind that this is only part of the problem. That this is only for one year will make planning and delivery harder and will reduce the overall value and impact of the Government’s financial commitment to the NHS.

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Comments

John Kapp

Position
director,
Organisation
SECTCo
Comment date
30 August 2019

I am a former councillor in Brighton and Hove who has been blowing the whistle about the democratic deficit in health, in which the 2/3rds of the health budget (c£80bnpa) delegated to local authority councils is not included in their bufgets, as described in y paper 'What's killing the NHS?' on 9.129 of www.reginaldkapp.org. This allowed the BBC's Emily Maitlis to accuse Jeremy Hunt and 5 other leadership contends on 18.6.19 of 'cutting locl government spending by 30%' whereas if the £80bnpa is added, the spending increases by 26%.
I would be most grateful for your considered reply on this conundrum.

Mark Stacy

Position
Director,
Organisation
CCs
Comment date
09 September 2019

The third major economic statement of the year will be surprisingly tough for a government now boasting a growing economy and a Commons majority. Chancellor of the exchequer George Osborne will deliver the details of the Autumn Statement and spending review on Wednesday, November 25. A five-year view of the government’s spending plans, it will outline how £4 trillion of taxes will be spent across different departments. The pledge to increase counter-terrorism spending by 30% in the aftermath of the Paris attacks highlights the contradictory strains on the chancellor. Health, education, defense, and overseas aid are ring-fenced. But everything else is “unprotected” and vulnerable to cuts. This includes police budgets, which could be reduced by 25%.

Researched: https://www.concretecontractorsstlouis.com

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