The House of Commons has just passed a bill enshrining into law extra funding for the NHS, described by the government as the “biggest increase in modern memory.” But while the government is trumpeting extra funding, heavy-hitting independent organisations have been sounding serious concerns about NHS finances. The National Audit Office (NAO) published two reports on NHS financial sustainability and capital funding this week, warning that the NHS still faces serious financial challenges. These warnings are echoed by NHS Providers, the membership body for organisations that deliver NHS services, which argued for further major investment on top of the NHS Funding Bill commitment. So why is there such concern around NHS finances when the government has committed to an apparently historic increase?
The government is right to say the outlook for NHS finances is improving, with funding set to rise by an average of 3.3 per cent a year above inflation. This is a lot higher—in fact, around double the rate of increase over the last decade of austerity. But it’s below the historic average for the health service and significantly lower than the 6 per cent average under the Blair and Brown governments. It just about matches growing demand pressures and rising input costs but provides no headroom either to address the legacy of a decade of under-funding or support major improvements in access to—or quality of—care. It is this legacy of underfunding which is responsible for many of the issues identified by the NAO and NHS Providers.
The NHS Funding Bill covers spending on front-line patient care but excludes other crucial areas of health spending: funding for training new doctors and nurses, investment in buildings and equipment and the grant to local authorities for public health programmes. These areas have all been cut as the government has “robbed Peter to pay Paul” across the health budget, in an attempt to protect front-line care. As the NAO highlights, over five consecutive years a total of more than £5bn has been taken from vital investment in buildings and equipment and used to prop up struggling front-line services. The chickens have now come home to roost, with the NHS facing a backlog of maintenance of at least £6.6bn.
Before the election, the government pledged to build six new hospitals and upgrade 40 more, with cash injections of £1.8bn and £2.7bn announced in August and September 2019 respectively. The extra money is welcome but coming after so many years of disinvestment, it is in reality a modest down payment on the needs of the health service. Capital investment in the healthcare system—spending on new buildings, equipment and IT, and improvements to and some maintenance of NHS trusts—is low by international standards: our recent study found that the UK spends just over half the share of GDP on healthcare capital compared to similar countries
And it is not just in broken windows and leaking roofs that this underinvestment manifests—it’s also in the outdated and unreliable IT and medical technology that doctors and nurses rely on to do their jobs. The UK has far fewer MRI and CT Scanners per capita than most OECD countries—about a third the proportion in Germany. With rates of cancer survival in the UK lagging behind other countries and better early diagnosis a key factor in improving them, such equipment is not a “nice to have”—it is a necessity.
Perversely, while the NHS knows how much it is going to receive for day-to-day running costs up to 2023/24, the government has made no firm commitments to funding levels for long-term capital investment beyond next year. Health Foundation-funded research by the University of Birmingham found that uncertainty around capital budgets has led trusts to abandon long-term transformation projects. What is urgently needed is a substantial multi-year capital settlement which is allocated based on a clear assessment of the service’s needs.
And capital is not the only area that the funding bill leaves wanting. With over 100,000 vacancies in NHS trusts in England, the single biggest issue facing the NHS is its workforce. Without the staff to operate them, buildings and scanners alone cannot address the severe capacity issues across hospitals, mental health and general practice. The government has committed to 50,000 extra nurses and 6,000 more GPs but turning this from rhetoric to reality will require funding. We therefore need to see a similar settlement for workforce training.
Another notable exclusion from the bill is public health—funding which enables local authorities to deliver vital preventative services that protect and improve health. Spending per person on this has fallen by a quarter over the last five years. Funding falls within the wider health budget alongside capital and workforce training, and it is only recently that this government considered these pots of money separately from funding for front-line NHS services. This is deeply unhelpful and runs contrary to the approach used by governments in the past. If no further money is allocated to these wider areas of funding, the total real-terms increase to the health budget will amount to 3.1 per cent a year to 2023/24. Our analysis shows that this is below the level needed to maintain current standards of care, never mind deliver the major improvements to services that the government has promised.
With this funding bill, the government has given a signal that it wishes to invest in the NHS, but currently it’s a long way from job done.
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February 07, 2020
File photo dated 03/10/14 of a ward at a hospital. It is claimed only one in eight hospital trusts comply with regulations on reporting patient complaints which risks undermining confidence in the NHS.
