Delivering a health system fit for the future

Claudia Martinez

Claudia Martinez

September 25, 2019 | @claumartinezv

The healthcare system is facing unprecedented challenges. Increased demand for care, reduction in local government funding and workforce shortages are putting the system under severe strain. NHS Trusts are £571 million in deficit, waiting time standards are systematically being missed and public satisfaction with the quality of care, and the range of services received, is decreasing.

The Government has rightly acknowledged that delivering a healthcare system fit for the future will require fundamental reform to the way care is delivered and for funding to be channelled to the right parts of the system. Below are the key areas that Reform believes the Government must consider ahead of its Comprehensive Spending Review.

How much does the Government spend on healthcare?

In 2018-19, health spending in England was £125 billion; 37 per cent of the Government’s departmental resource budget for the year, and the second-largest departmental budget after the Department for Work and Pensions (DWP). Next year, total investment in healthcare is set to rise to £130.9 billion.

Most of the Department for Health and Social Care’s (DHSC) budget goes toward funding the health Service, with 93 per cent of total spending in 20181-9 (£113 billion) allocated to the NHS. The DHSC also invested £6 billion in capital improvement projects, such as equipment and hospitals. The rest is allocated to funding public health initiatives and education and training for doctors and other healthcare staff.

Figure 1: How does the Department of Health and Social Care spend its money?

Source: Department of Health and Social Care, Annual Report and Accounts 2018-19; 2019

Making the most of the £20.5 billion

Last year, then Prime Minister Theresa May announced that the NHS would be receiving a £20.5 billion per year funding settlement by 2023-24, in real terms. This would help relieve the demand and financial pressures currently facing the Service and provide a foundation for service transformation.

The NHS Long-Term Plan, published in January 2019, sets out an ambitious vision for joined-up and integrated care and outlines how some of the new funding will be spent. The Plan commits to increasing investment in mental health services, which will receive £2.3 billion a year by 2023-24 in real terms. Children and young people’s mental health services will also grow faster than the overall NHS funding and mental health spending. Primary and community care services will access £4.5 billion in real terms over the next five years to help deliver integrated services and placed-based care.

Figure 2: NHS England’s revenue 2019-20 – 2023-24

Source:  NHS England Mandate Revenue 2019-20; 2019

Even with this new funding, the future of the NHS is far from sorted. It has been argued that an extra £8 billion per year on top of the NHS’s budget boost will be needed to achieve the objectives laid out in the Long-Term Plan. 95 per cent of mental health leaders warn that the new funding will not meet current and future demand. Additionally, detail on how the money will be spent is still thin on the ground and concern has been expressed regarding how far this new funding will go in light of the resource and workforce pressures currently facing frontline services.

To deliver the step-change in quality and access to care that the Plan envisions, it is crucial that this funding is effectively spent and reaches the frontline.

Workforce, infrastructure and public health: Unanswered questions

Funding is urgently needed in areas that fall outside the NHS funding settlement. Important questions remain regarding how much money will be available for local authorities to deliver essential public health services, as well as far it will go towards delivering training and education to doctors and other health professionals.

Local authorities play a critical role in health promotion and illness prevention through the delivery of public health services, such as sexual health and children’s support. Yet, public health spending by local authorities has reduced by £0.14 billion between 2014-15 and 2018-19.

By most accounts, the greatest challenge currently facing the NHS is its workforce. There are over 90,000 vacancies across the Service and 40,000 in nursing only. The NHS is also struggling to retain key staff: between 2017-18, 593 fully qualified GPs left the Service. While recruitment of trainee GPs has improved with 3,473 trainees joining the NHS in 2018 (10 per cent more than in 2017), a shortage of qualified professionals puts increased pressure on the current GP workforce and risks impacting the quality of care that patients receive.

Despite the Government’s recent commitment to revert the cuts to Continuing Professional Development Budgets and provide a personal development budget to all nurses, more effort and resources must be put into recruiting, retaining and developing the workforce. The DHSC itself has recognised that its ambition to recruit 5,000 more GPs by 2020 remains “extremely challenging”. In 2018-19, Health Education England spent £2.8 billion on training, education and continuing professional development for key healthcare staff. Yet, total national spending has fallen by more than £200 million since 2014-15.

The healthcare estate is not only a strategic asset to the NHS but integral to the successful delivery of new models of care. Capital investment in the estate, however, reduced by £0.61 billion between 2014-15 and 2018-19. During this period the DHSC also reallocated over £3.6 billion from its capital to its revenue budget to ease the pressure on budgets and fund day-to-day activities.

Lack of investment coupled with increased demand on services has left the NHS with a £6 billion maintenance backlog and unsafe and unfit-for-purpose buildings. The recent investment of £1.8 billion pledged by the Prime Minister is yet another one-off cash injection and not enough to meet the long-term capital needs of the NHS estate, which have been estimated at £10 billion.

The future of social care: Endless promises?

The NHS Long-Term Plan calls for a healthcare system which is joined-up and designed around the needs of patients. To deliver on this promise, closer partnership working between the NHS and social care is essential. This will not be achieved unless the Government commits to a long-term funding solution for social care.

In 2017-18 local authority spending on adult social care was £17.9 billion, £402 million more than in the previous year, but £1.23 billion less when compared to spending in 2009-10. While local authorities have sought to protect their budgets and continue delivering services, the number of people accessing social care support has decreased steadily since 2015-16. If no action is taken, it is estimated that the funding gap in social care will reach £4.4 billion in the next five years.

Funding is urgently needed to address the shortfall in local authority budgets. Failure to do so will render any attempts at reforming the social care system fruitless. Long-term reform of the social care system can only be achieved if responsibility for care costs is shared between the state and its citizens. This will require state funding to be targeted at those with the highest need and lowest means. Reform’s research shows that an insurance-based system where working-age adults contribute a percentage of their income into a Later Life Care Fund, could help deliver a more sustainable model for funding social care in the future.

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