Intended for healthcare professionals

Opinion

What will public spending cuts mean for the NHS and social care?

BMJ 2022; 379 doi: https://doi.org/10.1136/bmj.o2519 (Published 19 October 2022) Cite this as: BMJ 2022;379:o2519
  1. Richard Vize, public policy journalist and analyst
  1. London

The longest serving health secretary is now the chancellor of the exchequer in search of cuts. The health service looks exposed, but could Jeremy Hunt end up delivering a workforce plan?

Hunt was explicit on the public spending consequences of needing to get debt falling as a share of the economy: “All departments will need to redouble their efforts to find savings, and some areas of spending will need to be cut.”1

But he claimed every decision to be announced in the Medium Term Fiscal Plan on 31 October will “prioritise the needs of the most vulnerable.”2

One part of the prime minister Liz Truss’s growth plan that survived the Hunt cull was the abolition of the health and social care levy, which the Office for Budget Responsibility (OBR) had estimated would raise £12.4 billion a year.3 Abolition does not hit the spending plans for those services, but it kills off an experiment with an element of hypothecation for NHS and social care funding.

Hunt needs to find around £60 billion (the Institute for Fiscal Studies estimate) to £72 billion (the OBR’s figure).4 The £32 billion from scrapping Truss’s plans barely gets halfway there.

Between 1980 and 2009, UK healthcare spending as a proportion of GDP almost doubled from 5.1% to 9.9%, which is roughly where it stayed throughout the decade of austerity from 2010. Thanks in part to pandemic funding, it is now around 11.9%.5

This puts the UK in the middle of the pack compared with other wealthy nations.6 But the UK is an outlier in how it spends, with a lot being consumed by hospitals and little invested in community and preventative services.6 Avoidable hospital admissions are high, an indication of underinvestment in primary care.7 So poor funding distribution increases pressure on the system.

The government spends £1.2 trillion.8 Departmental budgets for public services account for £545 billion.9 Health and social care spending—£190 billion in 2021/22, 35% of the total—dwarfs every other department, such as £76 billion for education and £21 billion for local government.10 This means it would take calamitous reductions in other budgets to match a small percentage cut in health and social care.

With Hunt committed to prioritising the vulnerable it would be perverse to cut social care, which is already under massive strain after deep cuts.11 That leaves the NHS exposed.

NHS England’s budget is £153 billion.12 Even without Hunt’s cuts, NHS England had already warned it could have to save £20 billion over the next three years because of inflation, including unfunded pay awards.13

Between 2014/15 and 2019/20, the NHS capital budget was raided to support day-to-day spending. This has pushed the maintenance backlog to £10 billion.14 While capital only accounts for around 6% of health spending, consequences such as the shortage of scanners15 and hospitals at risk of roof collapse16 have a severe impact. But with the government focused on short term survival, another attack on capital spending is possible.

NHS managers make up just 2% of the workforce,17 so further cuts here would have a marginal impact.

Health and social care secretary​ and Truss loyalist Thérèse Coffey can be expected to be ruthless. In particular, with her opposition to measures to reduce harm from smoking18 and the rumoured ditching of a health inequalities white paper.19 Local government public health directors must fear yet more reductions on top of their 24% real terms cut between 2015 and 2021.20

But it is possible that, to distract the public and placate NHS staff, Hunt could trade health cuts for the promise of a workforce plan, which he has been championing as health and social care committee chair.21 Having been so vociferous on the issue he would risk looking foolish if he now failed to deliver. And the Conservatives would be unlikely to ever have to implement it.

Footnotes

  • Competing interests: none declared.

  • Provenance and peer review: commissioned, not peer reviewed.

References