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Extra funding for NHS offers no respite for councils

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LGC editor Nick Golding’s commentary on NHS funding boost.

There was a political imperative on the prime minister to show her government cares for the NHS by giving it a generous 70th birthday present. Theresa May’s sellotaping of an extra £20bn a year by 2023 in its greetings card duly ticks this box.

However, the lavishness of the NHS’s bounty announced yesterday is not necessarily as great as billed, or indeed sufficient to meet growing demand “pressures and deliver… world-class care”, as Ms May said the government sought to do.

The average rise in NHS England’s core funding of 3.4% a year for the next five years is lower than the service’s average funding increase of 3.7% since the NHS was created.

What’s more, the prime minister’s pledge doesn’t include social care (quelle surprise), public health, health education and training and capital and transformation budgets. It covers largely the NHS’s day-to-day spending but few of the areas in which investment now can lead to reduced demand for expensive services or a greater ability to cope with it in future.

As George Stoye, senior research economist of the Institute for Fiscal Studies, wrote in a blog: “Investments in these areas today, alongside spending on other related services such as social care (which was not mentioned yesterday), may help to provide better and more cost-effective NHS care in future.”

According to LGC’s one-time sister title Health Service Journal (we’re now amicably divorced siblings…), well-placed sources say that as part of Friday’s funding agreement it was decided that the NHS “should not face additional pressures” because of demands from social care. Therefore social care funding should be boosted, although the level of this boost will be determined at a future date.

In a speech at the Royal Free Hospital earlier today the prime minister said: “We also know we need to improve social care and continue to support prevention and public health, both for the benefits they bring in themselves and to relieve pressure on NHS care.

“So we will come forward with proposals to put social care on a more sustainable footing. And we will set out budgets for both social care and public health as part of the forthcoming spending review.”

So there are some slightly wishy washy indications of future money for social care and public health.

Part of the trouble is that Conservative-led governments of this decade have form when it comes to fiddling the numbers on NHS funding. In George Osborne’s 2015 spending review, he promised the NHS would receive an additional £10bn above inflation by 2020-21. A health select committee report from July 2016 pointed out that the government had redefined health spend so that it just covered NHS England’s budget. Thus the £10bn was “being funded by reductions in areas of health spending which fall outside NHS England’s budget, such as the public health grant to local authorities, and education and training funded through Health Education England”. The committee put the increase at £4.5bn over the spending review period.

Public health has endured £200m of cuts; social care has the misfortune of being part of local government, just about the worst hit part of the public sector in the austerity of this decade. Most councils may have chosen to prioritise their retention of resources for social care, their single biggest spending service. However, if their central funding has just about been halved, social care has inevitably been ravaged (at a time of rising demand). Three quarters of adult care directors are considering reducing eligibility for care still further.

So for the local government part of the care system, Ms May’s promise to help providers “plan for the future with ambition and confidence” looks a little thin. The budget clarity can has been kicked further down the road.

A well-connected source last week told LGC they have no faith this summer’s social care green paper will do anything to offer the sector a more sustainable future. Health and social care secretary Jeremy Hunt has devoted all his energies into securing the funding commitment announced at the weekend. Mr Hunt believes he can only make one powerful pitch to the Treasury at a time so the social care funding debate has not really begun in the corridors of power. The green paper will be filled with visions for social care service improvement that may be a little too motherhood and apple pie to actually offer any immediate support to beleaguered directors.

As the King’s Fund’s Richard Humphries, writes for LGC today: “The prospect of the forthcoming green paper fulfilling the prime minister’s pledge last year to offer ‘the first ever proper plan to pay for – and provide – social care’ represents the triumph of hope over experience. It seems more likely that the substantive funding issues will not be addressed until next year’s spending review.”

Services are falling over now; more councils than Northamptonshire CC are in dire financial straits. Councils – even more so than the NHS – need financial clarity now.

Scepticism that social care will get no more than financial jiggery pokery in the spending review was hardly aided by the Boris Johnson-pleasing claim that the extra money for the NHS was being funded by the fabled Brexit dividend. If Britain faces a mammoth EU divorce bill and the government accepts there will at least be a short-term economic dip as a result of Brexit turbulence, where exactly has this extra money been found from?

As Sarah Wollaston, the Conservative chair of the health select committee, tweeted: “The Brexit dividend tosh was expected but treats the public as fools. Sad to see Govt slide to populist arguments rather than evidence on such an important issue. This will make it harder to have a rational debate about the ‘who & how’ of funding & sharing this fairly.”

One might equally argue that to announce extra money for some bits of the health system but not others makes the entire announcement tosh. However, the populist need to give the NHS a birthday present has been fulfilled.

Nick Golding, editor, LGC

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