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Devolve all health budgets and create new taxation powers, leaders say

Similarly to the Greater Manchester model and building on sustainability and transformation plans (STPs), all local areas should request total devolution of their health budgets in order to become increasingly free of central government control, a think tank has argued in a groundbreaking report backed by cross-party leaders.

In a report supported by KPMG, Localis made the case for local NHS and local government leaders to gain control over their entire local health budget, with funding raised and controlled locally in order to support greater flexibilities.

To achieve this, the think tank said areas across the country should negotiate health devolution deals with the government that can empower leaders to drive integration, transformation and financial sustainability in their local health and care economies.

The health devo deal, which has only been sought by Greater Manchester and London so far, would then see local leaders accountable for an area’s control and distribution. This should include a commitment to “full open book accounting” between providers and commissioners, Localis argued, thus breaking down the siloes between them.

It would also mean local areas should have the ability to increase the social care precept above the current 2% cap, as well as establish devolved health taxes, rationalise all local NHS estates into one single body, and buy out PFI loans.

Today’s arguably radical report is based on a survey of over 100 key NHS and council stakeholders which found that 78% of respondents supported devolving control of the total health budget, arguing it would make a “positive difference” to the economy.

They also claimed that health devolution would inspire more integrated and sustainable economies over the course of this Parliament.

These arguments were backed by some of the country’s biggest political heavyweights, including NHS Confederation chair Stephen Dorrell, London mayor Sadiq Khan, and Lib Dem health spokesperson and former care minister Norman Lamb MP – who wrote in the latest edition of NHE about the importance of mental health in STPs.

Khan took the opportunity to make the case for “crucial” health devolution in the capital so that it can “take control” of its own destiny.

“Providing NHS leaders with greater flexibility and ownership over their services will help them to better meet local demands and manage the health of their communities,” he added. “London has become the main tax generator for the whole country, and putting this money back into the capital’s health services and giving them better powers will help create an integrated, sustainable NHS to be proud of.”

Lamb called the report a “welcome contribution to the debate on devolution” by setting out an “ambitious liberal vision for the health and social care service”.

“The centralised structure of the NHS has too often stifled innovation, efficiency, and local accountability,” the former minister argued. “Even though most people now agree that decisions should be made as close as possible to the people they affect, we haven’t done enough to apply this principle to our most treasured public service. 

“The Greater Manchester agreement was a landmark achievement, but genuine devolution would place greater trust in local areas to raise additional revenues rather than simply devolving the management of Whitehall block grants.”

NHS Confed’s Dorrell added that the report sets out an agenda “which provides a key response to the health policy challenges we face”, as well as being “extremely timely”.

He added: “At a time when it seems that discussion about the implications of Brexit borders on an obsession, it argues that local leaders to step forward to fill the vacuum.  The message is clear. Civic leaders should not wait for permission; they should act now and seek forgiveness later – in the unlikely event that it proves necessary.”

An NHE investigation earlier this year also concluded that health devolution in itself could even be better for care integration than STPs, with councils across Greater Manchester reporting greater amounts of place-based working than the rest of the country.

But MPs have also argued in a February report that despite its great potential, health devolution “may not be needed” in all areas.

Precept, taxes and estates

Regarding a higher care precept, the report said the current 2% threshold means the amount raised “varies substantially” across councils – but could actually develop into a considerable stream of money.

This would then “mark several real changes”, such as the role of councillors changing as they are increasingly held to account, and the culture within councils shifting towards thinking about health and wellbeing.

It added that, if a region is particularly affected by a certain disease, local leaders should be able to bring in “the relevant health tax” to raise revenue and “provide disincentives behaviours” that cause the problem – similarly to the sugar tax proposed on a national basis.

“It will be hard to implement a tax on consumption at the regional level,” the report said. “But we think it should be part of the public discourse in the same way that devolving income tax and the social care precept are.”

In terms of estates, the report said the current NHS estate is “vast but used inefficiently” – with poor management of the public realm changing under schemes like One Public Estate, but “not quickly enough”.

“New models of care rely upon more appropriate infrastructure. This is particularly true for the primary care estate,” the report argued.

“With this in mind, we therefore recommend that local areas should consider rationalising all local NHS estates into one body. As in Sweden – and similarly to Crown Estates – this could be transferred to a holding company structure that is arm’s length of the state, which then works alongside local authorities and one or more private sector partners.

“Alternatively it could be led by a network of providers and local authorities working across a sub-regional geography, as is the case in north London.”

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