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Osborne to announce £2bn extra funding for NHS in Autumn Statement

George Osborne is set to use his Autumn Statement on Wednesday to announce an extra £2bn of funding to bolster and transform the NHS, having apparently been persuaded by the urgent demands for more money made in recent months by senior figures across the health service.

The chancellor is expected to say the money will be used to buy new services and facilities that will help transform the NHS, making it more efficient for taxpayers and more effective for patients. It will also help the NHS to prepare to meet the challenges of an ageing population with people living longer.

Osborne is also expected to endorse the proposals set out by NHS England chief executive Simon Stevens in his Five Year Forward View, in which he described the best way to deliver “a world class and universal NHS that is sustainable for the long term”. In the report Stevens also warned of a looming £8bn funding shortfall by the end of the next Parliament.

Responding to the new funding announcement, Stevens said that services are under pressure and with the economy now growing the health service needs “genuine new investment”.

He added: “That’s the case I’ve been making on behalf of the NHS to government, and today they’ve listened and responded with the funding we need for next year to sustain frontline NHS services and kick-start transformation. Of course there will still be pressures and difficult choices, but the government has played its part and the NHS will step up and play our part too. Today represents an extremely welcome vote-of-confidence in the NHS’ own five year plan.”

The NHS has been in desperate need of extra funding to both help it cope with the current demand, and to transform it into a service that can deal with a changing healthcare landscape. Last week the King’s Fund published a briefing calling for £2bn of funding for the health service in England to be included in the Autumn Statement to help avoid a financial crisis. The think tank argued that if the money was not found patients would bear the cost as staff numbers are cut, waiting times rise and quality of care deteriorates.

Responding to the news that the money would in fact be included in the statement, Richard Murray, a former health department official who is now head of policy for the King’s Fund, told the FT that the cash was less about investing in a new NHS than “making sure the old NHS still provides acceptable services”.

“It doesn’t say anything about how the service will be funded through the lifetime of the next parliament. It is stage one rather than the final word,” he added.

However it has emerged that £700m of the £2bn promised had already been allocated by the Treasury to the Department of Health, made up of ‘back office’ savings and non-NHS budgets.

Of the total £2bn to be invested, £1.5bn will be routed conventionally into CCGs and specialised commissioning allocations, becoming part of general spending.

Around £200m will be spent on health economies which are under extreme pressure financially and clinically, such as Staffordshire. Some of this money could also be pumped into more financially healthy areas already beginning to adopt the new care models detailed the Five Year Forward View.

The remainder will pay for expanded and enhanced primary and out-of-hospital care. This ring-fenced investment will be repeated in each of the five years of the next Parliament – producing a total budget of £1.1bn. It will be funded by fines levied on banks for misconduct in the foreign exchange markets.

The British Medical Association also welcomed news of the funding, calling it an “encouraging step forward”.

“It does appear that politicians of all parties are starting to get the message about the dire state of the NHS finances,” said Dr Mark Porter, chair of the BMA.

He added: “We are particularly pleased that policymakers have listened to the BMA and confirmed that £250m will be allocated annually for the next four years to invest in GP premises and out-of-hospital infrastructure. 

“Many GP facilities have been starved of investment for decades with the result that a number of GP practices are too small and inadequate to cope with the number of patients.”

However, the head of the Institute for Fiscal Studies has warned that protecting the NHS for the next five years would force “staggeringly big” budget cuts elsewhere, with schools, pensions and benefits all in line for “dramatic” reductions in the years ahead if Osborne still plans to balance the budget by 2017-18. Paul Johnson said to the Telegraph: “Essentially, over the next Parliament you’re going to need to see cuts at least at the level that we have seen over this Parliament in order to meet the fiscal objective that they have got.”

This will mean that spending on “unprotected” services — such as local council budgets, the justice system, the environment, and transport – will see “an average cut of over a third in real terms” between 2010 and 2020.

(Image: c. PA Wire)

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