News

Osborne frontloads extra £3.8bn into NHS next year to alleviate pressures

Chancellor George Osborne is expected to announce an urgent £3.8bn injection in the NHS in 2016-17 to help mitigate growing pressures resulting from staff and bed shortages, rising demand and swollen provider deficits.

The extra money, on top of the £8bn promised by 2020-21, will be announced today during the Spending Review. It will take the next year's spending up to nearly £6bn.

The move shows how seriously the Treasury takes the concerns of Simon Stevens, NHS England’s chief executive – who has been forthright on the need for frontloading the extra £8bn.

According to the Guardian, Stevens asked for at least an immediate £4bn but was only offered £2bn by the chancellor, who is understood to believe that any more would be unrealistic and unaffordable in the current financial climate.

Today, the paper said the profile of spending in the health service will grow by £3.8bn next year, slow down to £1.5bn in 2017-18, then the rate of growth will gradually decline in the next two years until a sharper rise in 2020-21. It also suggested that there may be another Spending Review before the end of this Parliament, at which point the NHS could renegotiate settlements.

It is understood that extra funding for mental health services will be determined by the mental health taskforce chaired by Mind’s Paul Farmer, whose report has been pushed to November.

The funding deal will allow the NHS to pay for 800,000 extra operations and treatments, 2 million more diagnostic tests, 5.5 million more outpatient appointments and spend another £2bn on new drugs, according to the Treasury. There will also be up to £300m more spent on cancer diagnostics every year by the end of the decade.

Over £500m will also be invested in new hospitals in Cambridge, Brighton and Sandwell, while £2bn will be generated by selling off the health service's surplus estates.

Stevens said on Monday night: “This settlement is a clear and highly welcome acceptance of our argument for frontloaded NHS investment. It will help stabilise current pressures on hospitals, GPs and mental health services, and kick-start the NHS Five Year Forward View’s fundamental redesign of care.

“In the context of constraints on overall public spending, our case for the NHS has been heard and actively supported.”

Health secretary Jeremy Hunt has also been quoted as saying that the upfront investment means the NHS can implement its ambitious plan to transform services in the future.

“We are passionate about building an NHS that offers the safest, highest quality care anywhere in the world – with services smoothly operating seven days a week. This new money will help us finish the job,” he added.

Public health and social care

NHS Confederation, welcoming the announcement, said the extra cash is the consequence of the health service making a strong and consistent case to the Spending Review “based on sound economic policy”.

“Increasing NHS spending by £3.8bn in 2016-17 appears a positive step. It could give the NHS a fighting chance of  transforming care in line with the Five Year Forward View, and longer term would provide the certainty that enables it to invest in new models of care,” its chief executive, Rob Webster, said.

But he stressed that significant risks persist regardless, especially if social care isn’t adequately funded and public health does not see any marked improvements.

He continued: “Local government budgets have been cut dramatically over the last five years and there is no doubting the knock-on impact this has on the NHS.

“If the funding gap in social care is not adequately addressed, costs will be shifted to health and if we don’t use resources to keep people healthier for longer, we store up trouble for the future.”

But Webster acknowledged the benefit of having the extra funding frontloaded, one of its key recommendations to the Treasury and the centrepiece to the Confederation’s lobbying for a number of years.

These recommendations were strongly echoed by the health service’s finance officers and finance directors last week, when they claimed that the government should frontload as much of the £8bn extra as possible by April 2016 since the entire amount will be needed within the next 18 months.

Though the majority of these finance chiefs were not confident that the NHS could achieve intended £22bn savings by 2020-21, Webster is adamant that the extra £3.8bn next financial year will increase these odds.

“On Wednesday, we will have a better sense of the full settlement for health and care, which will allow us to consider the settlement as a whole. We’ll also be looking in the coming weeks to bring system leaders together to analyse proposals in full and provide a considered view on what it means for health and care,” he concluded.

The extra money will be a helpful pick-me-up given the fast-declining finances in the NHS, with providers already racking up a deficit of £1.6bn in the half-year mark – expected to exceed the forecast £2bn by the end of 2015-16 – the biggest in history.

But media sources expect that Osborne will still be criticised for raiding other parts of the Department of Health’s budget, as well as the public health cash pot and the CQC’s income – but particularly for looking into phasing out state-funded nursing bursaries.

Anita Charlesworth of the Health Foundation also believes that, while the extra cash is useful, concerns remain about what has not been announced yet.

“Any move to redefine and shrink the definition of the NHS would be particularly worrying. If some of the new money comes from other parts of the health service – such as public health or training – it would be a false economy,” she told the BBC.

Similarly, Julia Manning, think tank 2020health’s chief executive, said that while the windfall is very much welcome, it does not answer longer-term funding questions and is, essentially, a ‘stop gap’.

“It doesn’t answer the longer-term funding questions of what sort of NHS we can afford or what a serious long-term illness prevention strategy would cost,” she said.

“There are also indications that public health – the backbone of prevention – will be cut. If true this decision lacks any logic and consistency with the government’s previous pronouncements on investing in prevention.”

Manning also said the spending, which should realistically increase by 2% to match the UK’s European counterparts, should be conditional on the NHS harnessing digital technologies to increase service efficiency.

(Top image c. Richard Stonehouse/PA Wire)