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25.11.15

Chancellor confirms NHS England budget increase, but other cuts to DH spending

The chancellor has confirmed that there will be an increase in NHS spending in England from £101bn in 2015-16 to £120bn 2020-21. 

In the Spending Review, George Osborne stated that by the end of the Parliament the NHS would be provided with £10bn per annum more, with £6bn a year available by the first year so that the NHS’ own Five Year Forward View is fully funded.

However, the government expects the NHS to deliver £22bn of the efficiency savings it said it can find in the Five Year Forward View, to deliver the best value from NHS resources. 

Osborne said: “We will work with our health professionals to deliver the very best value for that money. That means £22bn of efficiency savings across the service. It means a 25% cut in the Whitehall budget of the Department for Health.” 

This reduction in Department of Health spending means big cuts to health bodies funded by the remained of its budget, notably Health Education England, which pays for the recruitment of health professionals, and Public Health England. It was noted, for instance, that the government would be reforming the way it funds nursing education – moving from a bursary system to a loans system

Nigel Edwards, CEO of the Nuffield Trust, said: “Contrary to the impression given that this is simply a cut in the DH’s administrative spending, the Treasury’s figures show it actually represents a £1.5bn cut in a single year to budgets that include training for doctors and nurses, and important preventive measures like stop smoking services and programmes to combat obesity. 

Yesterday’s announcement by the chancellor of £3.8bn of extra funding for the Health Service sounded generous, but it is now clear this may have come at the cost of services that the NHS depends on. Behind yesterday’s glowing headlines, there are some big unanswered questions.” 

The Department of Health also plans to sell nearly £2bn of assets over the next five years, which will release land to build at least 26,000 new homes. 

Rob Webster, CEO of NHS Confederation, said that following the autumn statement the task of delivering a £22bn efficiency programme “isn’t any easier but the conditions within which we will do it are certainly clearer”. 

“The commitment to front-load funding across the next two years gives the NHS a fighting chance to transform the way that care is delivered to patients,” he said. 

“We should be under no illusion of the challenges ahead. The chancellor has agreed today to protect NHS England’s budget, rather than the total budget for the Department of Health. This has a big impact on vital resources needed to deliver the Five Year Forward View, including on public health and clinical training. The cut to public health in particular is hard to swallow considering the importance of investing now to keep people healthy and avoid building trouble for the future.” 

There has also been criticism of funding for social care, with the move to allow councils to raise council tax by up to 2% as part of a new social care precept being branded as not enough. 

Edwards stated that despite today’s extra investment in social care, care services in England remain on the brink of collapse. 

“The chancellor says he’s addressed the problems of social care by allowing local authorities to increase their council tax bills by up to 2%. But even by his own admission, that will only raise £2bn a year by the end of the Parliament, and only if EVERY local authority does it – whereas we already know that the funding gap for social care will be £2.9nn a year by then,” he added. 

As part of his Spending Review, Osborne stated that he will pour £1.5bn into the Better Care Fund by the end of the Parliament and make it available to local government in order to allow councils to finance social care. 

Paul Briddock, director of policy at the Healthcare Financial Management Association (HFMA), said: “The government has listened to the calls of those on the ground for the pledged money to be front loaded, which will support NHS organisations, the vast majority of which are facing a difficult 2016-17. 

“When other sectors and services are facing cuts, the NHS will be grateful for this additional funding, which will help to meet the additional demands being placed on the NHS.” 

Further analysis of the Spending Review’s impact on the NHS to follow.

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