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Evidence and consultations

Spending Review submission: health and social care funding

The short, medium and long-term outlook

The period covered by this Spending Review will be the most challenging in the recent history of the health and social care system. Both services must simultaneously respond to growing pressures on services and put in place large-scale changes to ensure their future sustainability. Failure to do so will mean patients having to wait longer for diagnosis and treatment, the quality of health and social care declining, and fewer people receiving publicly funded social care.

The challenge for the Spending Review is to provide adequate resources to maintain high-quality care and to enable change to happen. The health and social care system must also re-double efforts to improve productivity. As we have argued, it takes time to realise the productivity opportunities that exist, and time is short (Appleby et al 2014). Extra funding is urgently needed to deal with growing deficits in the NHS and the prospect of even deeper cuts in social care.

Changes in spending plans between the budgets in March and July showed that there are choices to be made about the pace and scale of deficit reduction. These choices are not easy but they demonstrate that it is not inevitable for health and social to be put under even greater pressures as a result of five more years of austerity. If the government is serious in its commitment to health and social care, it must ensure that adequate funds are available both in this parliament and longer term.

In this context, these are our key messages for the Spending Review.

  • With all parts of the NHS under growing financial pressure, and even the most prestigious and well-run hospitals now forecasting deficits, the NHS is on course to overspend its budget in the current financial year. Emergency deficit funding is likely to be required this year, perhaps amounting to £1 billion.

  • The government’s commitment to increase the NHS budget in real terms by £8 billion by 2020 is welcome but this is the absolute minimum requirement to maintain standards of care. It will not pay for new commitments such as seven day services. It is essential that this money is front-loaded from 2016/17 to avoid an accelerating decline in performance and quality.

  • A dedicated transformation fund is essential to unlock productivity improvements and support the development of new care models across health and social care. Our work with The Health Foundation estimates that £1.5 – £2.1 billion a year is required from 2016/17 to 2020/21. Some of this funding could be found from existing sources, although additional funding will also be needed.

  • The previous government protected all health spending. This approach must be maintained. Further cuts to the public health budget would be a false economy and undermine government commitments on prevention. There are also risks in cutting spending on training the future workforce when staff shortages and the costs of agency staff are major concerns.

  • While achieving £22 billion in efficiency savings by 2020 is hugely ambitious, there are significant opportunities to improve productivity, and the NHS must engage staff at all levels in a new mission to deliver better value at lower cost by changing the way that clinical care is delivered (Alderwick et al 2015). The 1.4 million staff who work in the NHS must be supported to achieve this.

  • The social care system must be protected from further cuts in local government budgets and the £6 billion in funding previously earmarked to implement the Dilnot reforms must be invested over the Spending Review period to tackle the growing pressures on social care. If this does not happen, publicly funded social care will be become a safety net for only the poorest and most vulnerable members of society.

  • The temptation to support social care by transferring funds from the NHS must be avoided. Instead, as the Barker Commission set out, there is a compelling case for a new settlement that brings the two systems together and moves to a single ring-fenced budget and a single local commissioner of services. This is best done by a staged transition over the next decade as outlined by the Commission (Commission on the Future of Health and Social Care in England 2014).

  • To ensure adequate funding, the long term aim should be to increase public spending on health and social care to 11–12 per cent of GDP, the proportion currently spent by countries such as France, Canada and the Netherlands on health care alone. On current plans, GDP on health care in 2020/21 will fall back to levels last seen in 2005/6, underlining the seriousness of the situation facing the health and care system

In our view it is not credible to maintain that current standards of care can be sustained (let alone improved) without the funding needed to deliver this. The government should therefore spell out the consequences for patients and users of publicly funded social care of not providing the additional funding we argue for. This means being honest about the fact that access to care will deteriorate further and quality of care will be compromised because of the choices made about public spending and taxation during this parliament.