NHS budget ‘will have to stretch further’
pharmafile | October 21, 2010 | News story | | George Osborne, NHS, NHS Confederation, NHS funding, government, king's fund
The NHS budget has been protected from the worst of the Comprehensive Spending Review’s swingeing cuts, with a raise that is above the rate of inflation – but only by the tiniest margin.
The UK is facing its biggest spending cuts for decades, with £81 billion to be slashed from budgets over the next four years, and the health service will not be immune.
It will have to find £1 billion a year within four years to help social care services, spending on things like buildings will be cut by 17% and there will be a 33% reduction to its administrative budget.
Health Secretary Andrew Lansley acknowledged that the NHS budget will have to “stretch further than ever before in these difficult times”.
“Due to the deficit and the increasing demands on NHS and care services we have had to make difficult decisions about where this money is spent and we have to make every penny count.
“That is why we have chosen to invest in supporting social care and reablement – honouring our commitment to protect the most vulnerable in our society. And ultimately a better integrated health and care system will mean a more efficient system that delivers savings in the longer term – as more people live independently and are discharged from hospitals sooner.”
The government will be dropping the expansion of free prescriptions for people with long-term conditions, one-to-one nursing for cancer patients and a one-week wait for cancer diagnostic tests – all programmes announced by the previous Labour government, but not yet in place.
But chancellor George Osborne confirmed that the new cancer drug fund, already subject to some uncertainty, would still be provided, and he said the government would protect spending on health research and prioritise the treatment of dementia.
The chancellor will raise NHS spending in England by £10 billion from £104bn this year to £114bn by 2014-15, the equivalent of just 0.1% above inflation each year and according to analysts PwC this means the NHS “faces years of painful change”.
“The financial reality is that the NHS will have to manage costs and find efficiency savings of 15-20% against slowing revenues over the next four years,” says PwC partner Ian Wootton.
Comprehensive spending review reactions
As good as could be expected – that was the response by the NHS Confederation to the government’s comprehensive spending review.
“Given the huge financial pressure on our public services, this settlement is as good as the NHS could have hoped for under the circumstances,” said Nigel Edwards, acting chief executive of the Federation.
But he warned: “We will have to work very hard to ensure the impact on services is minimised.”
“The NHS is going to have to really up its game on productivity because of high levels of increasing demand and new technology,” admitted Edwards.
“Achieving more will be immensely difficult when we are going through such a major programme of structural reform.”
Osborne’s increase in the total budget for social care of £2 billion by 2012 was welcomed by the NHS Confederation, which had previously said that slashing this would be a false economy.
PwC partner Stephanie Allen welcomed the move, saying it would help “transform the way social care services are delivered today”.
The £1bn shift from the NHS to social care for the elderly, “alongside the priority in the health budget to prevent and treat dementia more effectively,” was also helpful, she said.
Edwards agreed, but added a note of caution. “The money is not ring fenced,” he says. “With severe pressure on council budgets, we are worried that these funds will not get through to the people who need it.”
The King’s Fund’s chief economist John Appleby had already warned that most of even a 1% real increase in funding would be absorbed by the costs of restructuring the NHS.
He said: “It is worth remembering that all ‘real’ figures quoted by the spending review will be based on estimates of general inflation in the economy – the GDP deflator.”
He pointed out that this is not the same as the retail or consumer price indices, nor is it the same as the inflation rate experienced by the NHS, which has historically been higher than the GDP deflator.
Adam Hill
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