Budget day for the NHS

Nov 22, 2017 | By Greg Manuel | Posted in Incisive Health

Richard Douglas, Senior Counsel at Incisive Health and former Director General for Finance, Strategy and the NHS at the Department of Health, reviews what the Autumn Budget means for the NHS.

It may be less than many in the NHS had hoped for; but I suspect it is a lot more than most expected.

The main headlines from the Chancellor’s speech were:

-£350 million additional revenue this year for winter pressures;

-an additional £2.8 billion revenue over the next 3 years with £1.6 billion of this next year and £0.9 billion the year after;

-a commitment to fund any new pay deal for Agenda for Change staff next year; and

-an additional £10 billion capital over the life of the Parliament.

Looking at the supporting budget documentation: an additional £0.4 billion is added to the Resource Departmental Expenditure Limit this year; £1.9 billion next year and £1.07 billion the following year. This includes Barnett consequentials with England impact as set out in the Chancellor’s speech. Importantly this is a real addition to the overall Department of Health budget not simply a transfer from other budgets to NHS England.  There don’t appear to be either any technical fiddles or new cost pressures added to the system.

On capital, the position is not quite as straightforward.  The speech referred to an additional £10 billion; the additional exchequer funding is in fact £3.5 billion on top of the £0.4 billion announced at the spring budget. An additional £3.3 billion is to be found from land sales and the remainder from private finance.

How does this all match with the NHS ask?  On revenue the health think tanks had said a minimum of £4 billion next year; the budget gives about £2 billion plus pay award funding. On capital, Robert Naylor talked about £10 billion and the budget gives a government share of £3.5 billion.

Neither the revenue or the capital is something for nothing. There is an expectation that the revenue will allow performance to get back on track and reduce waiting - but at least no new targets. And for capital, that it will be used to support transformation and for the most challenged trusts to improve performance.

It is noteworthy that no other public service has been given either a significant revenue uplift or an underwriting of pay settlements.

What impact will all this have? At this stage in the year the 2017-18 money is likely to have more impact on the financial bottom line than operational performance. For next year and beyond, although things are still incredibly tight, arguably they are no longer at the impossible end of the scale. And the additional capital provides an opportunity to turn around the serious underinvestment of recent years.

So, depending on your point of view a glass half full or a glass half empty? Perhaps the glass just isn’t big enough.

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