Mini budget delivers stability for coming year but not long term

Amid worsening Brexit turmoil, chancellor Sajid Javid delivered a mini budget with a headline £6.2 billion for the NHS. Unfortunately, most of this money has been announced before. Also, it covers a single year, when a long-term plan is needed, not least to fund technology. Lyn Whitfield reports.

Amid increasing political turmoil over Brexit, there was some uncertainty about whether Sajid Javid’s ‘mini budget’ would go ahead on Wednesday, 4 September.

In the event, the chancellor did make a statement (The Guardian coverage). He promised an “end to austerity”, more money for key public services, and a new economic policy for what he insisted would be a post-Brexit Britain.

As part of this, Sajid said the NHS would receive an additional £6 billion next year, with £2 billion for capital spending. This sounded good, except that most of the money had been announced previously.

Even if that hadn’t been the case, this wouldn’t have been the budget that the NHS wanted, because it only covers a single year. Former chancellor Philip Hammond had promised to unveil the results of a three-year comprehensive spending review, which would have been much more useful for planning.

This year’s slice of the birthday cake

The NHS is in a better position than some departments, because it has the NHS Long Term Plan to deliver and the NHS70 “birthday present” money to do that.

The “birthday present” is the “extra £20.5 billion a year for the NHS in England” that former prime minister Theresa May found for the health service when it marked its 70th anniversary last June.

Next year’s instalment is the biggest component of the mini-budget’s £6.2 billion. However, this money only covers revenue spending; and, as the Nuffield Trust’s Sally Gainsbury has been pointing out, it won’t go that far.

First, as she wrote in a briefing ahead of last year’s Budget, the money is being “added to a system that is currently underwater” – facing unrelenting demand, falling behind on targets and barely managing to balance the books.

Second, the Treasury has quietly shifted a chunk of the money towards the end of the first five-years of the plan. As the official documents supporting the mini-budget make clear, the NHS will receive a real-terms increase of just 3.1% next year; well below the long-term trend of 4%.

This “backloading” also makes it harder for the health and care system to bring in some of the reforms and innovations, that are supposed to make it sustainable in the long-term. Third, this money only covers “frontline” spending, and not public health, training, or capital.

Or, social care, which is facing a crisis that impacts on the NHS by pushing more people, particularly frail, old people into hospital, and then making it hard to discharge them again.

Long-term capital plan needed

Back in June, the NHS Confederation urged the government to address “unfinished business” in these areas, of which capital of most interest to health tech, because so many NHS IT projects require capital funding.

With rotten timing, NHS Providers launched a campaign to get the government “to address the challenge of NHS capital funding in the forthcoming spending round” just as the three-year CSR was scrapped and the mini budget was announced.

The £2 billion that Javid ‘announced’ in the mini budget is, in fact, the £850 million for 20 hospital building and enhancement projects that Boris Johnson announced this summer, and the £1 billion that he said would be spent on basic maintenance (Guardian coverage).

Think-tanks have demonstrated that, one way or another, this is money that is already in the system, but that NHS trusts have not been allowed to spend. Putting this point to one side, NHS Providers points out that £1.8 billion is “inadequate” when the NHS backlog maintenance bill has reached £6 billion.

More fundamentally, its campaign flags that no capital budget has been set for the NHS beyond this financial year. Also, that the mechanisms that are supposed to give trusts access to capital funding “do not work”.

This is something that many IT suppliers will recognise, given the long-delays that can be incurred by tech projects at every sign-off point.

NHS Providers was hoping to secure a multi-year capital funding settlement, enough money to bring spending on buildings, scanners and other tech “into line with comparable economies” and a more efficient and effective mechanism for spending the money.

The mini budget has not delivered this. Although NHS England chief executive and NHS Improvement leader Simon Stevens told the Expo 2019 conference in Manchester that he was optimistic that a long-term capital budget would be set eventually.

Where has the tech fund gone?

The NHS should be in a better position to address its technology agenda than some other areas that require capital, because the last CSR, concluded in 2016 when Jeremy Hunt was still health secretary, put aside money for IT.

Hunt said £4.2 billion would be spent on NHS IT from 2017-18 to 2022-23 of which £1 billion to £1.8 billion was new money ( story). A good chunk of this has been spent on national initiatives, such as the global digital exemplar and local health and care record exemplar projects, and on more recent priorities, such as cyber-security and Microsoft licensing.

However, after combing through NHS Digital’s accounts, the Health Service Journal’s tech correspondent, Ben Heather worked out in June that there was still around £700 million to spend this year and next. Unfortunately, by August, NHSX had confirmed that a substantial amount of this money is “up in the air”.

In his briefing, Heather explained that the NHS Long Term Plan Implementation Programme, also published in June, committed to spending £264 million on technology over the next two financial years. However, this money is coming from Hunt’s CSR pot; it is not additional cash.

Also, this money is all revenue. There is no capital budget in place, and previous capital allocations may or may not be honoured. Heather noted that there is, in effect “a void of clear information about where money for NHS IT is going, and whether money already promised is still coming.”

Tech funding ‘chaos’? 

On the ground, this has been evident for some time. The extensions to the GDE programme that have been floated have not materialised and the LHCRE projects are making slow progress amid rumours that NHSX wants to change their approach.

Money is clearly going to NHSX itself and to headline projects. Another chunk of the mini budget’s £6.2 billion was £250 million for an NHS AI Lab that was announced this summer (with virtually no details beyond a press release, The Register pointed out).

However, there seems to be little or no money going in on the ground. Heather noted that the £412 million from Hunt’s CSR settlement that his successor, Matt Hancock, said would go to sustainability and transformation partnerships in his first few weeks in office, has quietly been forgotten about.

Heather quoted “one senior NHS IT provider” willing to describe the current approach to NHS IT as “chaos”. Certainly, the lack of details around recent announcements means that it is hard to judge whether they are a good use of resources.

Or, even, a better or worse use of resources than, say, maintaining national programmes that were up and running or funding local initiatives.

A missed opportunity?

On the financial front, though, the biggest issue facing the NHS is now social care. As he took power, Prime Minister Boris Johnson promised to address this; but the mini budget could only promise £1.5 billion for councils in lieu of long-term reform.

In his keynote to Expo, Stevens welcomed this money. However, £1 billion is coming from the NHS, via the Better Care Fund, and the rest will come from a 2% precept that councils may or may not choose to levy.

Health and social care secretary Matt Hancock told the Big Tent ideas festival that he had no timetable for the much-delayed social care green paper. But without this, it is hard to see how the NHS is going to deliver the long-term plan which technology is meant to be supporting.

With so much going on in Parliament, response to the NHS elements of the mini budget has been limited. For the Nuffield Trust, director of research and chief economist John Appleby noted that while Javid did find £150 million for training, the rest of the NHS budget was, in fact, “barely rising.”

As such, he argued, the mini budget was “a missed opportunity to reverse years of cuts.” Over at the King’s Fund, director of policy Sally Warren was more charitable. Given the constraints the Treasury and Whitehall were working against, she argued, “this is a decent outcome”.

However, she concluded that while the funding that is going in next year “stops the current problems getting worse, it doesn’t undo years of underinvestment.” 

“We need a proper, multi-year settlement for all of health and social care to really have confidence that the sector as a whole can plan for and deliver a health and care system fit for the future,” she said. And that will need to include a long-term, funded, tech component.  

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