Freshwater’s healthcare team looks at some of the financial difficulties behind the NHS winter crises.
It is the nature of a crisis to occur abruptly and without forewarning. Every year we refer to an ‘NHS winter crisis’, an annual event that has become predictable, rhythmic and sustained. It is at this point that the NHS frays and surges in demand annul some of its mechanisms to cope. Standards inevitably slip, patients and staff alike struggle to provide treatment within established government targets.
It had long been the case that NHS standards rise and fall in line with the seasons; the declining burden now we are moving into warmer summer months makes way for an acute rise in demand over the winter. Statistics published by The King’s Fund paint a worrying picture where last summer did not herald a drop in NHS demand; where a large majority (estimates of 88%) of NHS trusts forecast a deficit by the end of next year; and a cap on agency staff may further contribute to diminishing services during an already quarrelsome period; a perfect storm. Now that spring is underway, new stories continue to report long waiting times for ambulances and A&E overcrowding.
Chancellor of the Exchequer George Osbourne’s last Spending Review further complicated the picture. The overall budget is set to rise in real terms by £8bn over the next five years, meaning today’s budget of £116.6bn will increase to £132.4bn by 2019/20, after we take into consideration the additional £8bn and £13bn worth of inflation. A rise therefore, and not an insubstantial one, that meets NHS England’s chief executive Simon Stevens’ recommendations. Nevertheless current predictions estimate that by 2020 the funding gap will have stretched beyond £8bn and be closer to £30bn.
That substantial figure of £8bn could soon become eclipsed by a widening gulf created by an aging, growing population, now living longer with medial conditions. If the government can’t make efficiency savings close to £22bn, healthcare quality will necessarily be impeded. While recent reports have suggested that the £8 billion figure was known to be lower than is required to maintain and improve standards.
It is important to acknowledge the ‘domino effect’ that this can cause. When social care funding is cut, services that care for people in the community, away from hospital beds, can no longer reach out so far. More people are drawn into hospitals leading to a vicious cycle of rising NHS demand, overcrowding, and increased spending on acute services. The Spending Review did detail a new 2% precept available for councils to levy at their will, specifically earmarked to boost the funds of the social care budget, but many think that this money will not cover the reduction in central government contributions.
As the suspected successor to David Cameron, George Osborne’s next five years as chancellor will face the added scrutiny of a could-be prime minister and, although he has often missed his own targets for economic growth without any real collapse in public support, as architect of government cuts to auxiliary NHS services (such as social care), he could precipitate a NHS crisis deeper than ever before. Perhaps not this year, but if the estimations concerning the funding gap are correct, a crisis in 2019 could seriously dampen his appeal with the electorate. While the failure of monetary instruments are politically testing, they are not as emotionally charged as a poor winter for NHS could be.
The Department of Health is one of a number of departments ring-fenced by the government from wider reductions in spending. The pot of money from which social care funding is drawn is, however, not from the Department of Health, but rather local authority budgets. Over the past five years local authorities have had to make savings akin to 37%. Last year’s Spending Review has asked local government to shave a further 29% from spending; a total reduction, from 2010-2020, of 66%. It also legislated that local government would be able to keep all of the money raised through business rates – a great fiscal devolution. The March budget, however, included the wholesale reduction of the business rate - which is expected to reduce local council budgets across the UK by a further £7bn.
Freshwater’s healthcare team has significant experience of working with health and social care organisations and NHS trusts, offering services from integrated communications to crisis management, as well as delivering events and training.