This was always going to be an unusual spring Budget. The first Budget since the 2019 general election and the United Kingdom left the European Union. The first Budget of a Chancellor who has been in post for just four weeks. And a Budget delivered under the growing shadow of coronavirus.
So, because of choice and circumstance this became a portmanteau budget where the Chancellor tried to focus on both the immediate challenges of Coronavirus and some of the longer-term goals of the Government. Here we unpick what some of the spring Budget announcements mean for the NHS and social care.
As the Chancellor said, let’s get straight to the issue on everyone’s mind – coronavirus. The government promised to give the NHS and public services whatever they need to deal with the impact of COVID-19, ‘whether its millions of pounds or billions of pounds’.
It’s billions. And the government has now created an emergency response fund to help the NHS pay for treating coronavirus patients and maintaining staffing levels; to help local authorities to support social care services; and to support wider public services that need to prepare for coronavirus. Initially set at £5 billion, the size of the fund will be reviewed as the impact of coronavirus develops. And alongside this fund, the increased costs and financial disruption to smaller businesses from the effects of coronavirus will be smoothed by measures such as refunding Statutory Sick Pay, business interruption loans and extending discounts and relief for business rates.
For the health and care service, this sends a clear message that the funding cavalry is on the way. But much more detail will be needed in the coming weeks over how organisations can access this funding; what ‘counts’ as coronavirus-related spending; what impact this funding will have on an already complex NHS financial regime that is based on annual income and expenditure targets; and – most importantly – what practical support the funding can deliver to staff and patients. One NHS hospital chief executive I spoke to this week said, ‘Even if I had more money for coronavirus, it will be difficult to find more intensivists, nurses, or hospital beds – the best thing I could do is use the money to support social care in my local area.’
NHS and health spending
Even as a new NHS funding bill works its way through parliament, the plans for total health spending have now changed (total health spending includes important areas of spending – such as capital investment – that lie outside NHS England’s budget and the new £33.9 billion NHS funding boost planned between 2018/19 and 2023/24).
The Chancellor used the Budget to announce an extra £6 billion of health funding over the course of this parliament – though a detailed breakdown of annual spending has not been provided yet. The £6 billion includes about £5.4 billion of revenue (day-to-day) spending over the remaining four years of this parliament. This will support the government’s manifesto commitments on more clinical staff, more GP surgery appointments, greater community-based care for people with learning disabilities or autism, and free hospital car parking for some groups.
And turning to capital investment in NHS buildings and equipment, there are several areas that will see increased spending. First, in 2020/21, the Department of Health and Social Care’s capital spending limit will be increased by the strangely specific figure of £683 million, to allow NHS trusts to refurbish and maintain their estate. The additional funding will be welcome, but with an estates backlog of high and significant risk issues that totals £3.4 billion already, the problems with the estate will be salved rather than solved.
There is also the previously announced £200 million (£100 million in 2019/20 and £100 million in 2020/21) for replacing old diagnostic equipment such as MRI, CT scanners and breast screening equipment to help the NHS achieve its target of faster diagnosis of cancer. And about £50 million for supporting research into coronavirus and wider prevention research.
Finally, there is £100 million of seed funding in 2020/21 to help the NHS develop proposals to build 40 new hospitals (although the work of developing proposals for new hospitals will also inevitably require more revenue funding for expert infrastructure advice). However – in what will become a common theme – it is unclear how joined up government thinking is on this issue, as the government’s new immigration system may reduce the capacity of the construction sector precisely as a new hospital building programme begins.
All of this leaves the total Department of Health and Social Care budget slightly higher in 2019/20 and 2020/21 than was planned before the spring Budget, with health spending now expected to increase by 3.4 per cent to £145.1 billion in 2020/21 (see Figure below).
Health and care workforce
Before coronavirus, the most pressing issue facing the health and care sector was the workforce crisis. But there was little in the spring Budget that obviously turbo-charges the upcoming NHS people plan (which was delayed till after the spring Budget), with the major funding commitments on nurses, GPs and other primary care staff already well trailed from the Conservative Party manifesto.
And the workforce measures that were included in the spring Budget do not always seem to align with these manifesto commitments. On the one hand, the government has made significant – and welcome – changes to the pensions tax rules that were leading to NHS staff turning down extra work and promotions. Although these new rules will kick in from 2020/21, the issue is so complex that it may take some time (and reams of accounting advice) before clinicians decide that routinely accepting additional clinical work is once again financially wise. But nevertheless, the government has acted to try and remove this financial disincentive.
On the other hand, the government has pressed ahead with its plans to increase the Immigration Health Surcharge – which asks many new arrivals to the United Kingdom to pay a charge to the Home Office as part of their immigration process. It is hard to see how increasing financial disincentives for immigrant health and care professionals makes sense at a time when the service is in desperate need of new international recruits.
If the runes on the workforce are confusing to read, they are even more confusing for public health. The new financial year starts in two weeks and directors of public health can only take an educated guess at how much money they will be able to spend on services that help people stop smoking, tackle the spread of sexually transmitted diseases and provide guidance and advice to lead healthier lives. This uncertainty could not come at a worse time for the NHS and voluntary and community services providers who rely on these contracts.
And as our recent briefing suggests, it is time for the government to be bolder in using the full range of its taxation and regulation powers to help meet its own manifesto commitment to extend healthy life expectancy by five years by 2035. But the opportunity was not taken in this Budget, and in time we will see if freezing every single alcohol duty for only the second time in 20 years really justified the cheers it garnered from government benches.
Adult social care
When it comes to fiscal events, adult social care is an exception to the rule ‘no news is good news’. Once again, a government has decided that the much-needed reform of adult social care financing is a ‘big issue’ that must be ‘tackled head on’. But not today.
In the interim, local authorities have some welcome news. There is £643 million of funding for accommodation to help people who sleep rough, and to boost support and treatment services for people with multiple complex needs such as homelessness, reoffending and substance misuse. And there are two sources of financial support for social care to deal with the impact of coronavirus. First, money should flow to them from the new £5 billion emergency response fund. And second, as many (but not all) social care providers are small and medium-sized businesses, they will also benefit from the refunded Statutory Sick Pay and other proposals aimed at businesses employing fewer than 250 staff.
But beyond this, local authorities will receive no extra funding in 2020/21 over and above what was provided in the 2019 Spending Round, even as costs continue to increase. The Chancellor used the Budget to propose ambitious increases to the National Living Minimum Wage that would see it rise to two-thirds of median earnings if economic conditions allow. This will be welcome for hard-working staff in the care sector but will also represent an unfunded cost pressure for cash-strapped local authorities.
So, what to make of all this?
Some uncertainty lingers after a Budget that provided some more pieces of the jigsaw but not a complete picture. The government has certainly acted to mitigate the financial impact of coronavirus on the health and care sector. It has provided funding to back-up its manifesto commitments, and it has addressed the pensions tax issue. But next year’s budgets for important areas of spending – including public health spending – are undefined with just two weeks left before 2020/21 begins. Hopes of social care funding reform must be deferred once again. And a Budget heavy on infrastructure spending left the NHS none the wiser on what capital investment will look like beyond the coming year.
And moving to the longer term, after a sprint to the line to get the Budget finished, officials must now prepare themselves for one of the most difficult Spending Reviews in recent memory. Some of the rules of the game have been set – the Spending Review will be completed by the end of summer and will set day-to-day spending budgets for government departments up to 2023/24 and capital budgets up to 2024/25. But this Spending Review will be conducted during a coronavirus pandemic and without detailed forecasts of how this outbreak will impact the public finances. Areas of spending that have not yet been protected – including parts of the wider health and social care budget – will surely come under tremendous pressure in the coming months as the government tries to stay within its spending envelope and fiscal rules. A Spending Review is a difficult task at the best of times. And, clearly, this is not the best of times.
Over the past few weeks officials have been framing this spring Budget as the first of a ‘trilogy’ of fiscal events in 2020 that included the coming Spending Review and the autumn Budget. But a Chancellor who used some striking rhetorical repetition to demonstrate his interest in ‘getting things done’ will also recognise two things: there is still plenty more to do, and in any trilogy the second act is usually the hardest to pull off.