Skip to main content

Impact of the Spending Review on health and social care

First Report of Session 2016–17

We welcome the Five Year Forward View, which sets out the funding challenge facing the NHS over the next five years and, for the first time, a vision for the service to equip it to meet patients’ needs. Last year’s Spending Review aimed to provide the funds to make the Forward View a reality.

The scale of the funding challenge is colossal, especially given the timescale for achieving it. While the NHS has been treated favourably in comparison with other departments, the funding allocated for the NHS in the Spending Review is less than would appear to be the case from official pronouncements. We call on the Government to be clearer in the presentation of its funding commitments. We are concerned that that the shift in resources, especially from public health, health education, transformation and capital budgets, will make it far more difficult to achieve the ambitions set out in the Forward View. In our view, the funding announced in the Spending Review does not meet the Government’s commitment to fund the Five Year Forward View.

There are also new challenges, most notably the rising deficits in NHS providers. The proposed strategies for reducing their costs—cutting the tariffs paid to hospitals, strict pay restraint, imposing agency price caps and reducing capital spending—are not sustainable ways of securing efficiencies in the long term.
The funding designed to pump prime the transformation of services to create better and more efficient services in the future, the Sustainability and Transformation Fund, is being used almost entirely to plug provider deficits, rather than to transform the health and social care system at scale and pace. The transfers from capital to revenue budgets are storing up future costs as well as reducing the funding available for essential transformation of services. We call for the Transformation element of the Fund to be protected to allow the ambitions of the Five Year Forward View to be realised.

The ongoing work to integrate health and social care services, in ways that better meet the needs of patients, shows great promise. But integration and devolution to local areas do not offer quick solutions to the financial problems facing the NHS and social care services. The Transformation fund is essential to get these promising plans off the ground, and we shall be monitoring how it is spent.

Historical cuts to social care funding have now exhausted the capacity for significant further efficiencies in this area. Increasing numbers of people with genuine social care needs are no longer receiving the care they need because of a lack of resource. This not only causes considerable distress to these individuals and their families but results in additional costs to the NHS. We will be monitoring the extent to which the Better Care Fund and Social Care Precept are successful in raising revenue and how this is distributed to reflect need and health inequality. We also note with concern that this funding will not arrive until later in the Spending Review period.

Workforce supply must be improved if we are to meet the future health and social care needs of the population. Most immediately, the Government should review the likely impact of the proposed abolition of NHS bursaries on the supply of nursing staff and other allied health professionals.

We are concerned about the cuts to Health Education England at a time when the workforce shortfall is already placing a strain on services and driving higher agency costs.

The Government has made it clear that it wishes to see more NHS services available at the weekends. Whilst there is now a clearer account of their intentions for seven-day services in hospitals and GP surgeries, we will continue to monitor their implementation. Given the constraints on NHS resources we will be reviewing whether the focus on seven-day services is delivering value for patients given the concern that it may displace measures which would be more cost effective.
The cuts to public health budgets set out in the Spending Review threaten to undermine the necessary upgrade to prevention and public health set out in the Five Year Forward View. We believe that cutting public health is a false economy, creating avoidable additional costs in the future.

We shall be looking for clear, verifiable evidence that the additional funding promised for mental health is being delivered to the front line, as well as evidence of sustainable progress towards the culture change across the NHS, from commissioners to providers, necessary to deliver genuine parity of esteem.

While the Forward View sets out the vision, we call on the Department of Health and NHS England to set out a detailed plan for realising the efficiencies and demand reductions needed to realise the Forward View. This needs to be accompanied by strategic thinking from Ministers about what priorities will best support achievement of the vision in the long term when resources are constrained.

We believe it is time for the Government and NHS England to set out how they will manage the shortfall in NHS and social care finances if the measures proposed by the Forward View fail to bridge the funding gap. If the funding is not increased, there needs to be an honest explanation of what that will mean for patient care and how that will be managed.