Health spending to rise around half the amount government claims, MPs report

Health spending in England is set to rise just £4.5bn in real terms by 2020/21 despite government claims it would increase by £8.4bn, MPs have warned.

Health select committee chairwoman Dr Sarah Wollaston (Photo: JH Lancy)
Health select committee chairwoman Dr Sarah Wollaston (Photo: JH Lancy)

The House of Commons health select committee said cuts to public health and training budgets and the use of transformation and capital funding to plug short term deficits made it far more difficult for the NHS to achieve ambitions set out in NHS England's Five Year Forward View.

Health select committee chairwoman, former GP Dr Sarah Wollaston MP (Con, Totnes), said that while the NHS had been treated ‘favourably’ compared to other government departments, ‘the increase in health funding is less than was promised if assessed by the usual definitions’.

The government rejected the committee's conclusions. A spokesperson repeated its claim to be funding the NHS's own plans with £10bn of extra spending.

BMA chairman Dr Mark Porter said the report was another ‘stark warning’ about the ‘financial crisis engulfing the NHS’.

NHS funding

In the 2015 spending review, the government announced an additional £8.4bn above inflation by 2020/21 for the NHS. Ministers said this funding injection, which came on top of a funding rise in 2015/16, meant the NHS would see total increase of £10bn a year in real terms by 2020/21.

But MPs said the £10bn figure did not accurately reflect the impact of the spending review on health spending.

The increase given in 2015/16 prices, as would normally be the case, the report said, would be £9.5bn.

And, contrary to previous years, the government’s spending review announcement defined spending in terms of NHS England’s budget rather than that of the DH. Once £3.5bn of cuts to non-NHS health budgets announced in the spending review, including public health and education, are taken into account, the overall effect on health is a real-terms increase of just £6bn. If the spending review period - from 2015/16 to 2020/21 - is considered the increase is £4.5bn.

New care models, demand reduction measures, and integration plans set out in the Five Year Forward View, the committee found, were not being embedded at sufficient scale and pace across the system.

NHS efficiency savings

The committee found that NHS England’s plans for £22bn of savings as part of the Five Year Forward View were ‘short on detail’. The committee called on the DH and NHS England to set out detailed plans for savings required to realise the aspirations of the Forward View.

MPs also raised concerns about the effect of cuts to social care funding on the NHS.

King’s Fund director of policy Richard Murray said it was ‘no longer credible’ to argue the NHS can continue to meet increasing demand within its budget.

The government, he said, ‘must review its priorities for the NHS and be honest with the public about what the service can deliver with the funding it has been allocated’.

Mr Murray added: ‘The committee has backed the independent assessment we and others made that the NHS budget will increase by much less than originally appeared in the spending review. We support their call for the government to return to using the previous definition of health spending.’

NHS transformation

Dr Wollaston said: ‘We welcomed the upfront funding which was designed to pump prime the transformation of services. But sustainability and transformation funds are being used almost entirely to plug provider deficits, rather than to resource essential changes to the health and social care system at scale and pace.

‘Short-term measures are being used to deal with the worsening financial situation. Capital budgets have been raided to meet current spending and trusts encouraged to "review their accounting estimates for savings". We are concerned that these measures are masking the true scale of the underlying financial problems facing the NHS.’

A DH spokesperson said: 'We reject these conclusions - as the chief executive of NHS England said at the time of the spending review, we actively supported the NHS' own plan for the future with the £10bn extra requested, despite the public finances being tight. 

'More than that, we're providing support to help hospitals make efficiencies and improve productivity as well as national measures to reduce the use of expensive agency staff.'

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