The outcome of the 2015 Spending Review will profoundly shape NHS and social care services in England over the rest of this decade. The King's Fund has collaborated with Nuffield Trust and The Health Foundation to provide the Health Select Committee with a clear, objective and independent view of its implications.
This summary is from the joint submission by The King's Fund, Nuffield Trust and The Health Foundation. There is also a supplementary independent submission from The King's Fund which can be viewed via the link below.
- In the context of deficit reduction and significant cuts to some departmental budgets, the NHS has received a comparatively favourable settlement and pressures on social care have been acknowledged. However, it is now clear that health spending will not rise by nearly as much as initially implied when the NHS settlement was announced. Social care funding will continue to fall short of meeting need, with the sector facing huge pressures in the short term.
- Total health spending in England will rise by £4.5 billion in real terms between 2015/16 and 2020/21, an increase of around 0.85 per cent a year. This will be almost identical to the rate of increase over the last parliament.
- £4.5 billion is much less than expected. This is because the Spending Review defined ‘NHS’ spending as NHS England’s budget, not the whole of the Department of Health’s budget – the definition used by previous governments. While NHS England’s budget will rise by £7.6 billion in real terms over the period, other health spending will fall by more than £3 billion.
- We welcome the fact that the additional investment going to NHS England will be front-loaded with most of the increase coming in 2016/17. However, much of this money will be absorbed by dealing with deficits among NHS providers (officially planned to be £1.8 billion in 2015/16) and by additional pension costs. With much smaller increases in later years, the NHS will struggle to maintain services let alone deliver an expanding range of commitments.
- Public health spending will fall by at least £600 million in real terms by 2020/21, on top of £200 million already cut from this year’s budget. This will affect a wide range of services including health visiting, sexual health and vaccinations.
- Overall, the NHS is halfway through the most austere decade in its history. Funding is not keeping pace with the rising demand for health care services. Public spending on health in the United Kingdom as a proportion of GDP is projected to fall significantly to 6.7 per cent by 2020/21, leaving us behind many other advanced nations on this measure of spending.
- Spending on social care is subject to some uncertainty, but looks set to remain roughly flat in real terms over the parliament. New powers to raise Council Tax by up to 2 per cent to spend on social care will provide flexibility for local authorities but are unlikely to raise as much as the government suggests and could disadvantage deprived areas with low tax bases.
- Additional money for social care provided through the Better Care Fund from 2017/18 is welcome, but risks arriving too late.
- This will not be enough to close the social care funding gap, which we estimate will be somewhere between £2.8 billion and £3.5 billion by the end of the parliament, when the impact of the National Living Wage is taken into account.
- Public spending on social care as a proportion of GDP will fall back to around 0.9 per cent by 2019/20, despite the ageing population and rising demand for services. This will leave thousands more older and disabled people without access to services.
- The Spending Review sets a course for continued pressure on quality and access to health and social care services.