A typical year in the UK has only two fiscal events – and the Autumn Statement is one of them. So it is a precious chance for a government to ‘course correct’ if its plans for the economy and public services are off-track. So, did the Chancellor take that chance?
Well, he used his Autumn Statement to talk largely about changes to tax rather than public spending. There were some wider economic announcements that are relevant to the health and care sector, including the freeze on alcohol duty; the rise on duty rates on tobacco products (alongside the government’s welcome ambition to make England smoke-free); and the rise in the National Living Wage from 2024. This latter move will be welcomed by employers who want a fair deal for their staff, while also raising the blood pressure of employers who will worry about where the money will come from to fund this increase.
But overall, this week’s budget documents had relatively little new to say on health and care spending and are instead replete with references to the Autumn Statement 2022, when there were more significant funding announcements for health and social care.
Health and NHS spending
From what I can see, though, the path ahead for health spending looks decidedly rocky. Overall health spending growth is starting to stall in real terms (Figure 1). And higher economy-wide inflation has further eroded substantial amounts from the cash boosts awarded to health and care services in last year’s Autumn Statement – essentially, the cash announced in 2022 will not go as far.
Tracking longer-term trends in NHS England spending is a trickier task now that NHS England has subsumed organisations such as Health Education England. And it gets trickier still because of technical changes to where depreciation funding (essentially the current costs of acquiring and owning fixed assets, for example, large NHS buildings and equipment) for the NHS sits. Footnote 2 to Table 2.1 in the main Autumn Statement document is particularly worth reading in this regard to see why NHS England’s day-to-day spending is now planned to be some £3.4 billion lower in 2024/25 compared to the Spring Budget 2023. But one thing at least is clear – between 2023/24 and 2024/25 under current plans NHS England’s budget will only crawl up from £161.1 billion to £162.5 billion in cash terms (ie, before factoring in inflation).
Now some of that crawl may be pragmatic. Public sector pay awards have a clear impact on NHS England’s spending pressures and until those are set for 2024/25 it is hard to anticipate just how large NHS England’s budget should be. But few would believe it is possible for the NHS to stick to its putative 2024/25 budget without significant cuts to the scope and quality of services for patients. And even if the 2024/25 spending plans are untenably low, until there is something else on the table they will have to form the basis of NHS operational and financial planning for the coming year. So even if these budgets are topped-up in the fullness of time, in the interim, NHS leaders can expect the usual unproductive industry of submitting, revising and resubmitting plans to begin.
And the path gets rockier still in future years. Day-to-day spending for government departments from 2025/26 to 2028/29 is still assumed to grow at only 1% a year on average in real terms – and the Office for Budget Responsibility’s economic and fiscal outlook highlights just how hard it would be to maintain or improve public services while delivering this unusually low level of spending growth. Capital investment will stay broadly flat in cash terms over this period. There is a word to describe this type of spending pattern for wider public services – ‘austerity’.
New announcements and commitments
What was that better news then? It broadly fell into two classes – more support to tackle mental and physical illness to help people back into work, and new investment to boost health care innovation.
So there were new funding commitments to expand Talking Therapies (an NHS England programme to support people with mild and moderate mental health conditions); expand employment support services within community mental health teams to help people gain and retain paid employment; embed employment support within mental health and musculoskeletal services in England; and the commitment to publish a health and disability White Paper.
But alongside the support there was sanction – including the hotly debated threat to remove free prescriptions for those the government describes as ‘people who should be looking for work but aren’t’. The government’s own assessment of what might happen when access to free prescriptions is restricted is worth invoking here: its evidence review on changing prescription charge eligibility for older people helpfully pointed out how removing free prescriptions can lead to people skipping asthma medication (for example) and ending up requiring hospital treatment as a result. You would hope this evidence review will, at the very least, give the government pause for thought.
On boosting innovation in health care, the Chancellor announced a new West Yorkshire investment zone with a focus on life sciences; and £5 million seed funding for a new Fleming Centre to help tackle antimicrobial resistance. He reiterated the desire to improve the UK’s ability to support commercial clinical research trials; and provided slightly more than £50 million for the Our Future Health genotyping programme.
So what does it all mean?
Fiscal events are important set-pieces for a government. They have to ‘meet the moment’.
At the moment, local authorities are going bust and directors of adult social services are saying they can’t meet their statutory duties. NHS finance directors are resubmitting their financial plans, with few – at least few that I’ve spoken to –confident that they will balance their books this year. No one knows what the future course of industrial action may look like or what its financial implications will be. By not investing more in health and care services now, the government is taking a substantial bet that it may rue when organisations lay their accounts next year and reveal potentially large and embarrassing overspends.
It is increasingly hard to see how this week’s announcements reflect a coherent and strategic approach. The National Audit Office’s recent damning report into the New Hospitals Programme was swiftly followed by its damning report on adult social care funding and reform. And the recurrent theme of short-term thinking in those reports could be extended to this Autumn Statement. A government that has staked a claim to taking long-term decisions has just reportedly deprioritised long-term capital investment in NHS buildings and equipment. In the same week as a new multi-million pound contract for a national NHS data platform was announced, local NHS organisations are reportedly rowing back on plans to invest in new digital technology so they can fund the costs of industrial action.
Unfortunately, it is starting to feel like incoherency and a lack of strategy represent ‘path dependency’ for health and care funding announcements – where decisions for the future are constrained by the poor decisions of today and the past. The Chancellor said that this was ‘an Autumn Statement for a country that has turned a corner’. That may be true on some economic indicators. But for those involved in delivering and using health and care services, that must sound like wishful thinking.