NHS Underspending Part 94

The current row between the Health Select Committee and the government about how much is spent on health in England is nothing new, and neither is the lie that it will increase by £10 billion in this spending round. Health spending is roughly equivalent to the Department of Health’s budget, which was £116.5 billion in 2015/16. It will rise to £121 billion by 2020/21, and increase of £4.5 billion after inflation.  Within this budget, the government currently gives just over £101 billion to NHS England, (NHSE) which oversees the vast majority of health pending. The NHSE budget is set to rise by about £7.5 billion by 2020/21.  This means there has been a £3 billion cut in other health spending outside NHSE, on services such as public health, education and training. The bulk of the transfer to NHSE is happening in the first few years of the parliament, so funding may actually decrease after 2018.

And it gets worse. The rise in NHS costs every year, for things like drugs and staff pay, also tends to be higher that inflation generally, and the extra import costs due to the falling pound post Brexit will make another big dent in any increase. The King’s Fund calculates the overall real increase by 2020/21 could be just £1.5 billion if estimates of “the NHS-specific measure of inflation” turn out to be correct. The health analyst Roy Lilley estimates the increase could end up at just as £800 million.

The “£10 billion increase” in health spending the government keeps parroting is just in the NHSE budget, and over a longer time period, counting back from 2014/15. The government has cleverly redefined health spending as ‘NHS England spending’ in order to hide the £3 billion cuts in public health, education and training. Given that the Five Year Forward View devised by NHS England chief executive Simon Stevens relies heavily on better public health and training, the government’s claim that the £10 billion Stevens asked for to accompany the plan has been ‘delivered in full’ is nonsense.

Sadly, many of the assumptions in Stevens’ own plan were also nonsense, most notably that the NHS could make £22 billion in efficiency savings by 2020 despite rising demand year on year from a growing population, an increasing number of elderly patients, advances in technology and um, poor public health. Austerity is strongly linked with mental illness, and mental illness is itself a high risk factor for physical illnesses caused by smoking, alcohol and poor diet. So large cuts in the public health budget could be suicidal for the NHS. The childhood obesity strategy has been an early victim.

In essence the NHS is not overspent, it is underfunded for the work it is obliged to do to provide a universal, safe, high quality service. This gap between funding and demand (which increases between 4 and 6% year on year) has been calculated by numerous bodies to be £30 billion by 2020/21, hence the current need for £20 billion plus savings. The hope is that Sustainability and Transformation Plans (STPs), which have been developed for every region in England in secret, so as not to frighten the press and public about the extent of cuts and closures needed, hope to deliver better, cheaper care by transferring far more patients from expensive hospitals into community care using private providers. But the huge cuts in adult social care budgets make this highly unlikely to succeed on a large enough scale to make the savings required. In 2015/2016, the NHS in England had a funding gap of £3.7 billion, so STPs would have to be accompanied by a miracle to turn it into £22 billion savings.

Add in the 50,000 NHS clinical staff vacancies, work related stress, poor morale and the insecurity felt by vital oversees workers, and the NHS is set for a spectacular crash. Not that Jeremy Hunt and Theresa May seem too bothered. Privatisation of the health service is well advanced and unstoppable without an NHS Reinstatement Bill. Having a cheaper service (especially cutting expensive staff costs including doctors) will expedite this further. Brexit may lead to a contraction in GDP and the public will be poorer and reluctant to pay more in taxes for health. May will not go as far as advocating an insurance based system for all, but just leave those who can afford it to take out their own private insurance as the public service around them crumbles. Alas, there are no private emergency departments and few private GP services. The NHS is crucial to the economy, not a drain on it. If the government abandons the NHS as a threadbare service for the poor, we will all be the poorer for it.