The four Budget must-knows to transforming care

The NHS probably shouldn’t be expecting much from the Chancellor’s emergency budget tomorrow.

Funding for 2015-16 was mostly settled in the autumn statement in December with a clear message that there would not be more money in-year.

‘The NHS probably shouldn’t be expecting much from the Chancellor’s emergency budget’

Thankfully, NHS funding was prominent in the election campaign and the public have secured a clear political commitment to fund the NHS Five Year Forward View.

This is a strong place to start and, while our members welcome the pledge, a number of urgent questions must be answered to establish the certainty needed to get on with the bigger challenge of changing care.

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How will additional funding for the NHS be phased in a multi-year deal?

The forward view describes £8bn additional funding as flat real terms growth in spending per person and accounts for demographics.

Office for National Statistics forecasts indicate population growth of around 2 million by 2020, of which 42 per cent is expected by 2017. This makes the case for extra funding coming in the first half of the Parliament, or at least it being distributed equally up to 2020.

‘There’s a fiscal challenge in the case for extra funding with the commitment to return to a budget surplus’

Of course, there’s a fiscal challenge in doing this with the commitment to return to a budget surplus by 2018.

There is certainly scope though within this to agree a multi-year settlement with HM Treasury that allows the NHS to look beyond annual cycles and align funding with other parts of the systems, such as allocations, pricing and pay.

The key for the NHS in doing this will be demonstrating how it will get the most value out of resources and the added benefit from further funding.

How will additional funding be used to fund transformation?

The national bodies’ forward view, alongside the 2015 Challenge of health and care charities, is clearly about transforming the NHS and delivering new models of care.

These new models need funding and, like most investments, there will be a period of “double running” where parts of the new and old models are funded at the same time. Capital funding for estates, IT investment and clinical back fill all feature too.

‘Provider deficits are a reality and we’re starting to see a similar decline in commissioning’

Provider deficits are a reality and we’re starting to see a similar decline in the commissioning system.

Some of the additional funding will be needed then to ensure services remain sustainable - for example, by relaxing the demands for efficiency in the tariff to shift the focus onto effective commissioning or by increasing clinical commissioning group allocations.

There is a middle ground though between keeping current services sustainable and pulling additional funding together with money already in the system for new models of care. The findings from the Health Foundation and the King’s Fund’s project on transformation funding will provide much needed evidence for this debate and is awaited with interest.

What about social care?

Care for frail older people with multiple conditions often includes social care. If the NHS needs reminding of the impact from protecting health spending, they only need talk to their partners in local government.

They’ve seen big cuts to their budgets and the impact on state funded social care spending is obvious, with 400,000 fewer people receiving social care services over the last five years. This has put a huge pressure on NHS services that all our members recognise.

‘Devolution doesn’t solve the challenge’

Demographics make this challenge even harder and councils are predicting a shortfall in spending for adult social services of at least £4bn – creating an even bigger health and care funding gap.

Devolution doesn’t solve this challenge, although it allow areas like Greater Manchester the freedom to bring health and care together within broader spending.

The challenge then is how to protect spending on social care for the next five years, which is not the same as local government budgets. The better care fund transfers money from health into social care services and the NHS will want to ensure this money is delivering value.

What does £8bn extra buy?

The NHS must not be seen to be always asking for more money. It’s a natural response from a service that is continually being asked to treat more people.

The forward view outlines a balance between the government finding £8bn in funding and the NHS making almost three times as much in efficiency savings, to fill a £30bn funding gap.

There’s a risk the funding gap will be bigger than this because of the impact of social care.

‘Tough choices will be needed to protect the NHS and patients we serve’

Similarly, the NHS might struggle to save £22bn without the right conditions.

If these big risks materialise, it’s a problem for both the government and the NHS. It’s not simply about the former finding more money, rather tough choices will be needed to protect the NHS and patients we serve.

Answering all these questions allow us to get on with the real work of transforming care, which will take skill and significant political will to succeed unencumbered by constant discussions about money.

This might not be explicit in the budget; nevertheless it’s a debate that officially starts now.

Rob Webster is chief executive of NHS Confederation