Demand and costs – the known unknowns
What is clear is that the government will need to bring forward a sizeable financial settlement to meet its manifesto commitments to the NHS and social care, while supporting the system to recover from the first phase of the pandemic.
Long before Covid-19, the government committed to increasing the NHS revenue budget by £34 billion by 2023/24. In March 2020 the Chancellor allocated an additional £6 billion to the NHS over the course of this parliament to support the delivery of those manifesto commitments. Adult social care services have not benefited from the same generosity or long-term planning, though they did start the year with an additional £1 billion, as announced at the 2019 Spending Round. While public health, after years of cuts, saw its budget rise by £80 million in early 2020.
The demand for and cost of delivering health and care services over the coming years now depends largely on the course of the pandemic. A ‘second wave’ of hospital admissions could lead to increased spending on personal protective equipment and costly procurement of block-contracted private sector capacity. A viable vaccine could effectively end the epidemic in the UK, but it too would come with a great, though as yet unknown, price.
We already know that the first wave of Covid-19 is set to leave a broad and insidious legacy on our health and wellbeing. The NHS and local government may be dealing with these consequences and costs for many years to come.
These increases in demand are only now starting to emerge, how long they last and their severity remain unknowns. What is more, they are set against a context of severe staffing shortages across the NHS and social care that could well impede the system’s recovery from Covid-19.
Years and years – the costs and benefits of short-termism
Given all these unknowns, the process of working out what the demand for health and care services will be and how far existing budgets will stretch next year, or indeed next month, is all but a guessing game.
Beyond the health and care system, the macro-economic outlook is equally uncertain. This, of course, will have implications for public spending; overall the Chancellor is likely to have less to spend now than anyone would have anticipated at the start of the year.
One of the many difficult choices that the Chancellor faces is whether he should press ahead with a multi-year settlement that’s likely to unravel quickly, or simply focus on the year ahead. While it may not be anyone’s first choice, could a one-year settlement be preferable to a three-year one that relies on improbable clairvoyance?
This might be pragmatic given the circumstances, but it will come with costs. Short- termism like this will limit the system’s ability to make progress on prevention, addressing stalling life -expectancies and redressing health inequalities. There are no quick fixes for these issues, their resolution will require long-term planning, strategic thinking and, of course, serious investment.
For other parts of the health and care budget, specifically capital, workforce and social care, a one-year budget will not suffice if the government wants to make good on its manifesto pledges to build more hospitals, recruit more doctors, nurses and primary care staff, and reform social care. These are multi-year projects that will need multi-year funding.
The NHS long-term plan and the five-year funding deal that accompanied it, provide precedent for treating constituent parts of the overall health and care budget differently.
Is there now a case to do the same thing for workforce, hospital building and social care while only planning one year ahead for the day-to-day running costs of the health service?
Thanks for the update. In community services we are already seeing a huge rise in demand, were already overwhelmed before COVID and are firefighting; so we are less likely to be able to offer preventative care. All around me for the last twenty years I have seen new services set up to meet the changing demands in the community (matrons, long term condition management, rehabilitation, phlebotomy, now newly emerging care home teams - all fabulous stuff) and hardly ever do we see any further investment into community and district nursing services, often described by others as the poor relation, we could do so much more if we had the investment. People need more services available to them at home so they aren't in hospital for a moment longer than they need to be.