The Chancellor’s nickname is Spreadsheet Phil—he is not seen as a risk-taker. But much of the pre-Budget commentary stressed that Wednesday could not be a “steady as she goes” affair. The politics and economics of our age demand action.
For many people one of the big tests for this Budget was how the Chancellor would address the toll that seven years of austerity has taken on our major public services. Would he be bold, break from the tight constraints of the spending limits imposed by his predecessor and increase funding to them?
One of the biggest single areas of public spending is the NHS. Just two weeks ago, the head of NHS England, Simon Stevens starkly reminded the chancellor that ignoring the pressures facing the health service would be a very risky strategy. This is true both for the health service itself and politically, with 90 MPs signing a letter on the NHS last week emphasising the need for a cash injection—including 33 Conservatives.
In a fairly unprecedented intervention, Stevens claimed that without extra funding, far from growing, the number of nurses and other frontline staff, hospitals, community health services and GPs were more likely to be retrenching. That it would be increasingly hard to expand mental health services or improve cancer care. And crucially, that the NHS waiting list would grow to five million people by 2021, reversing the progress that has seen the wait for an NHS operation cut from over 18 months to under 18 weeks.
Stevens threw down the gauntlet to the chancellor, saying it was not realistic to expect the NHS to continue to bridge the gap between sluggish funding growth and rising demand through efficiency targets. Stevens was clear that if the funding didn’t change, the “offer” from the NHS would have to; the government would have to legally abolish the national waiting times guarantee.
"We can no longer avoid the difficult debate about what it is possible to deliver for patients with the money available"—Malcolm Grant, NHS England chairPhilip Hammond decided that sticking to his predecessor’s NHS spending plans was a risk not worth taking. In this Budget the NHS was the clear winner, receiving an immediate cash injection of £350 million for winter pressures plus extra capital investment. Next year the budget in England will be almost £2 billion higher in real terms than expected. This despite the fact that overall the chancellor chose to keep a tight lid on spending: aggregate public spending will continue to fall as a share of GDP through to 2022/23. Stevens’s speech described an NHS on the brink. The chancellor’s extra funding will help it take an important step away from the edge next year.
But however welcome that extra funding, it still leaves a gap. As the National Medical Director of NHS England Bruce Keogh tweeted on Wednesday: “Budget plugs some, but def not all, of NHS funding gap. Will force a debate about what the public can and can’t expect from the NHS…” With Malcolm Grant, NHS England’s chair, adding that “we can no longer avoid the difficult debate about what it is possible to deliver for patients with the money available.” In the short term it is unlikely that the extra funding will be enough for the NHS to make major inroads into the waiting list problem. The extra money is about half the £4bn increase the Health Foundation, Nuffield Trust and Kings Fund estimated is needed next year.
The fundamental issues are not going away. The population is ageing and more of us have long-term health problems. There will be 900,000 more over 65s by the end of this parliament alone. New medicines offer fantastic potential but big bills. The NHS has a workforce problem that is arguably even bigger than its funding problem and more staff means more money. The government has promised a Green Paper on social care: improvement in this area is essential. We already know that the social care system is on the brink of crisis and facing a funding gap of £2.5 billion by 2019/20.
All that adds up to spending pressures for the NHS that grow by around 4 per cent a year over and above inflation—which is the average annual increase in funding the NHS enjoyed in the 60 odd years pre-austerity.
This is not some uniquely British phenomenon—it is true of countries across the OECD, regardless of how they fund and organise health care. How is that to be squared with the government taking a declining share of GDP in taxes? The Office for Budget Responsibility has been saying for years that this doesn’t add up—over the long-term the gap between tax income and the pressures on the state is growing, with health one of the big factors.
In the end, Stevens is right that it is not possible to expect the NHS to deliver huge efficiency gains so that we can have a first class health system on third class funding. The day that we have to face up to that has been postponed by this Budget, but not for long.
