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Prime Minister’s promise of extra funding for the NHS raises questions about how much, when and how?

The Prime Minister’s announcement that the government is committed to a new funding settlement over several years is welcome recognition of the growing pressures facing the NHS and the need to find a sustainable solution. Eight years of austerity have taken their toll on patient care and have led Simon Stevens, Chief Executive of NHS England, and Jeremy Hunt, Secretary of State for Health and Social Care, among many others, to argue publicly for additional resources.

The Prime Minister’s conversion to the cause reflects the difficulties experienced during the winter in meeting rising demand for care and also evidence of growing public concern about the state of the NHS and prospects for the future.

The nature of the government’s commitment will become clear only when there is more detail on when additional funding will be provided and the scale of the increases that are planned. The Prime Minister has already indicated that more resources will be found for 2018/19 to coincide with the 70th anniversary of the NHS and it is likely that the multi-year increases that have been promised will begin in April 2019. A commitment over five years and preferably ten would provide the certainty the NHS needs as long as the funding increases provided are realistic.

These increases need to be on a par with the long-term trend growth in NHS spending of just under 4 per cent a year in real terms if they really are to provide a sustainable solution. This means finding around £4 billion a year from 2019 onwards. Extra resources should also be provided for adult social care to bridge the funding gap of £2.5 billion we have estimated will open up by 2020 on current spending plans. Any new settlement must include social care as well as the NHS if the reforms put forward by the Barker Commission  are to be realised.

Equally important is to be clear how additional NHS funding will be used. Immediate priorities are to get back on track in delivering national waiting time standards, continue to invest in high priority services such as cancer, mental health and general practice, and eliminate deficits among providers and commissioners. The government and NHS leaders need to be realistic about the time required to deliver these priorities in the face of growing evidence of staffing shortages and limited capacity (such as hospital beds) in some areas of care. This underlines the argument for a long-term funding settlement linked to a credible delivery plan with workforce as its centrepiece.

'Immediate priorities are to get back on track in delivering national waiting time standards, continue to invest in high priority services such as cancer, mental health and general practice, and eliminate deficits among providers and commissioners.'

A strong case can be made for earmarking funding to support the further development of new care models which are beginning to show promising results in some areas of England. Progress in implementing these care models has been hampered by resources intended to pump prime new ways of delivering care in the community being diverted to reduce providers’ deficits. Areas, like Greater Manchester, that have received earmarked funding for transformation are further ahead because of the financial support they received, in Greater Manchester’s case amounting to £450 million over three years.

New care models are leading the way in giving greater priority to prevention and delivering more care in people’s homes and closer to home. They are also joining up the work of general practices and co-ordinating the work of practices with that of other staff providing care in the community. Adult social care is a key partner in several areas and the ten integrated care systems in England have been charged with taking forward this work at scale. Additional funding could help accelerate progress in these systems and across the NHS as a whole.

Another unanswered question is how the government will find additional resources when there are competing claims on public funding and a reluctance to raise taxes? An option favoured by some commentators is to increase National Insurance contributions either across the board or for specific groups such as people past retirement age who are still in employment and who are currently exempt from making contributions. The resources raised would be used to provide the funding increases that have been promised and existing spending would still be paid for through general taxation.

A hypothecated tax like this would have the advantage of creating a direct link between increased NHS spending and tax rises, recognising that National Insurance is a tax in all but name. There are also some disadvantages and we shall be exploring the challenges in using hypothecation to help fund the NHS in work to be published shortly. We shall also be playing our part in the work that now needs to be done to translate the Prime Minister’s commitment into a plan that really will work for patients and service users.