The Chancellor’s announcement today that he managed to find a whopping £2 billion for the NHS will bring a massive sigh of relief for many. All year doctors and hospital managers have been clamouring for a bailout as austerity began to bite across the health service. The Autumn Statement will also bring a sigh of relief for electoral strategists in the Coalition that will believe they have outflanked the Opposition in promising a “step change” in funding, neutralising the NHS ahead of the election, again. But for both real doctors and spin doctors the relief could be short lived.
Much will depend on whether the £2 billion will be used as a “down payment on reform” as the Chancellor promised. The Government has given its full backing for a recent plan set out by Simon Stevens, the new Chief Executive of NHS England, to modernise the NHS to meet changing needs. The Five Year Forward View set out an ambitious programme of changes to hospitals and community services to develop a new model of care. The number crunchers at NHS England estimated to deliver this vision requires up front investment and extra spending reaching £8 billion by 2020.
While hardly the £50 billion spending spree of the last decade, in a time of austerity £2 billion is bonanza for the NHS. The “flash flood” of investment that was triggered by the 2002 Budget largely went into higher pay for NHS workers and building more hospitals that now appear out of date. If NHS “soaks up” the extra funding in maintaining existing services it will be another wasted opportunity. Yet in his statement to the House of Commons on Monday the Health Secretary stated that just £200 million will be available to “pilot” the new models of care as set out by NHS England. The bulk of the money will go directly to the front line where it no doubt will be used to top up the balance sheets of hospitals that are struggling to pay their bills. Already different branches of the NHS will be queuing up for their slice of the Chancellor’s bailout and risk taking their eye of the ball when it comes to efficiency and reform.
The Chancellor’s pledge to increase funding for the NHS by £2 billion a year will only be worth if it the NHS can deliver £22 billion of savings. Here too the track record is not promising. Many will be wondering why the Department that had its budget ringfenced at the start of the Parliament will need a bailout at the end of it. It wasn’t if rising costs and greater demand came as a surprise. The 2010 Spending Review and the NHS White Paper of that year recognised the need to deliver £20 billion of savings during this Parliament. The Autumn Statement is implicit acceptance that the NHS failed to meet what became known as the “Nicholson Challenge”. Reports by the National Audit Office and others showed that the savings that were achieved were through national action and not through transformational change. Now more than ever the NHS will need to go further and faster to deliver efficiencies that successive reports have identified.
Increasing health spending this year was achieved by siphoning off underspends across Whitehall. Yet the Chancellor will not be able to get much from the back of the Treasury sofa next time. Meeting the ambition to raise revenue by £2 billion each year will only be met by cutting even more deeply across other services or ask the public to dig deeper into their pockets. No doubt the public will only accept higher spending if it delivers a better health service, not simply maintains inefficient services that fail to meet patients’ needs. Today’s announcement raised the stakes for the NHS to deliver.