UK’s health and social care spending plans: more of the same?BMJ 2015; 351 doi: https://doi.org/10.1136/bmj.h6458 (Published 27 November 2015) Cite this as: BMJ 2015;351:h6458
Five years ago the new coalition government set itself the task of repairing the United Kingdom’s finances. Through a combination of public spending cuts and tax rises, the government’s central macroeconomic plans in 2010 were to cut day to day borrowing and reduce the nation’s overall debt. By this year the fiscal repair job was meant to be complete.
Unfortunately, none of the government’s macroeconomic targets has been met. Borrowing is 3.9% of gross domestic product (GDP), not 1.1% as planned; the structural current deficit is 3.4% (£640.7bn (€920bn; $970bn), not zero); and, at over 83% of GDP, the national debt is 16 percentage points higher than planned.1 2
Instead of the sunny uplands of a booming economy and nearer to normal long run levels of deficit and debt, the government—intent on sticking to its debt and deficit reduction policies—is embarking on another round of spending cuts.
This week’s spending review has now set out reduced spending across the public sector, ranging from real cuts of 10% in block grants to Scotland, Wales, and Northern Ireland to 55% in central government support for local government. Together with welfare cuts, by 2020 government spending will consume just 37% of GDP, down from 41% in 2009.
Health and social care get off relatively lightly. Unlike the NHS there is no national global budget for social care: it’s up to local authorities how much they spend each year. But the chancellor of the exchequer has introduced additional tax raising powers for local authorities to fund adult social care, which, in the unlikely event that all local authorities take it up, could raise an estimated extra £2bn by 2020. Together with additional funding provided through the Better Care Fund (for councils and NHS organisations to jointly plan and deliver local services), this could give social care a real rise in funding by 2020-21. Except that this is not a done deal. Even if it were, after inflation, and given the real terms cuts over the past five years, the extra money would just—more or less—restore spending in 2020 to 2015 levels.
The reality is that we won’t know about spending on social care until it happens. For health we have some firmer numbers—though, true to form, the Treasury’s headline figures need some interpretation.
The government promised an additional £8bn over and above inflation by 2020 for the NHS. The spending review makes it clear that this applies only to one bit of the NHS total spend. While the budget of NHS England increases to around £109bn by 2020-21, all other NHS spending shrinks by over a fifth to £12bn over the next five years (fig 1⇓).
The now “unprotected” part of NHS spending includes funding of vaccination programmes and sexual health services, the Department of Health’s grant to public health, the costs of running bodies such as the National Institute for Health and Care Excellence and the regulators Monitor and the Care Quality Commission, and training of nurses. Over 45% of the “frontloaded” £3.7bn real increase in NHS England’s budget next year will be paid for by cuts in these unprotected areas. In addition, the NHS will need to bear around £1bn extra costs next year arising from changes in national insurance and pension arrangements and some or all of the cost of dealing with this year’s overspends (fig 2⇓).
Overall, it looks like the NHS in England will get almost the same real rise in funding each year (around 0.9%) as it did over the past five years—but frontloaded, and thus with smaller increases in most years to 2019-20 (fig 3⇓). The big difference is that this year the NHS starts from a much more difficult financial position, with some key performance measures heading the wrong way and (in the short term at least) much less scope to bridge the funding gap with increases in productivity.
Scotland, Wales, and Northern Ireland will decide their own levels of NHS spending, but with the assumption that the rest of the UK decides on spending changes in line with the English NHS, the NHS across the UK will take a one percentage point cut as a share of GDP in 2020-21, when compared with 2009-10 (fig 4⇓).
Cite this as: BMJ 2015;351:h6458
Competing interests: I have read and understood BMJ’s policy on declaration of interests and have no relevant interests to declare.
Provenance and peer review: Commissioned; not externally peer reviewed.