NHS funding – more questions than answers?

By Sean O'sullivan, Head of Health and Social Policy, Policy, Employment Relations and Communications on 26 June 2018 NHS Funding

Last week, the Prime Minister announced that the NHS will receive a funding increase of £20bn a year by 2023. The announcement was heavily trailed in the media including an interview with Theresa May on the Andrew Marr show.

In pledging extra money for the NHS, the Prime Minister had in mind the need for a good news story in the run-up to the NHS 70th anniversary celebrations. Moreover, with NHS trusts struggling to balance the books and to maintain the safety and quality of services, and with the public increasingly dissatisfied with its handling of the health service, the Government has been under increasing pressure to act.

Earlier this month, three leading health think tanks (the King’s Fund, the Nuffield Trust and the Health Foundation) wrote to the Prime Minister calling for urgent action on NHS funding. The think tanks warned that after years of low funding increases, combined with rising demand for services from a growing and ageing population, the NHS is facing unprecedented pressures and struggling to maintain standards of care.

This is evident from the King's Fund's most recent analysis of NHS financial and service performance, which shows that:

  • NHS trusts are predicted to run up a deficit of close to £1bn and that more than a third of clinical commissioning groups are also expected to run up deficits.
  • Demand for services has increased, with emergency admissions 7% higher in January of this year than a year previously and hospital waiting lists are at their highest for a decade. The A&E 4 hour target has now not been met since August 2014 and trolley waits of more than 12 hours doubled between December and January.
  • The impact of these pressures has fed through into falling public satisfaction with the NHS.

The authors of the joint letter reflect the consensus among independent commentators that the NHS needs real terms funding increases of 4% a year simply to keep pace with current demand and to provide some additional money for priority areas like mental health, cancer and primary care. They are also clear that:

  • anything less than 4% risks further deterioration in standards of patient care;
  • investment in frontline services cannot be achieved at the expense of other vital health expenditure for areas such as public health, capital investment and education and training of staff are all addressed.
  • investment must be accompanied by service transformation in order to ensure that the NHS delivers care that meets the needs of a changing population.

So how does what Theresa May has announced address these recommendations? She has confirmed that spending will be £20bn higher by 2023, which equates to an annual average increase of 3.4%. Welcome as this additional money will be, we know that this already falls short of the 4% annual increase that the think tanks believe the NHS needs simply to cope with current demand. Nor does it appear to include any additional spending on prevention, staff training and development or on social care (it remains to be seen if the forthcoming social care green paper on social care includes any proposals for a long-term funding settlement).

Exact details of how this increase will be funded will be announced in the budget in November, but it is likely that funding will largely come from a combination of tax rises and increased Government borrowing. The media initially reported that the NHS would benefit from a significant ‘Brexit dividend’ (and the Prime Minister did little to dispel this notion in her interview with Andrew Marr) but this has now been dismissed by most experts and also by Jeremy Hunt and the chancellor.

So whilst the RCM welcomes better funding for the NHS, we question whether the deal announced will be sufficient to meet rising demand and improve services. We will therefore be seeking precise clarification that the planned spending increase will meet existing policy priorities for maternity services.