HSJ Weekly Catch Up: The Budget, NHS omelettes, and slow networking

A Rubicon uncrossed

In the wake of Theresa May’s announcement that she would increase NHS funding by £20bn over the next five years, there was much comment that a Rubicon had been crossed – as there was no way the government could find that kind of cash without raising taxes.

Endless opinion polls were produced showing the British people would welcome such a move and there was a sense of an argument finally won.

But in the end, the £20bn was funded through a windfall provided by a surprise increase in government revenue, and tax remained (effectively) unraised.

That does not mean that Number 10 (if not the Treasury) had not accepted the need for NHS tax rises – there was plenty of evidence that it had. The revenue windfall allowed them to dodge that bullet.

Hindsight is a wonderful thing, but Simon Stevens and Jeremy Hunt would be forgiven for thinking: “Bugger, should have argued harder for more.”

In other health and social care news from Monday’s Budget:

• Further PFI and PF2 deals were ruled out by the chancellor, who stated there was “compelling evidence” the deals did not deliver good value for taxpayers or genuinely transfer risk to the private sector. 
• A new central team to try to cut costs on existing PFI contracts, starting with the NHS, is also promised.
• Mental health spending will increase as a share of total NHS spending over five years, the Budget document states. Media pre-briefings perhaps undersold this, by saying mental health spend would grow by “at least £2bn” a year in real terms by 2023-24. The £2bn sum implies only that mental health would get similar growth to the NHS budget overall – not quite the increased share of the pie that some think is due. Either way, the clear message is that mental health will be a priority in the NHS long term plan, as expected.
• The NHS is expected to deliver productivity growth of at least 1.1 per cent per year, with a final number to be confirmed in the long term plan. This is higher than the 0.8 per cent delivered over the last two decades, but lower than the 1.4-1.8 per cent the Treasury was thought to be pushing for.
• The Budget documents confirm the £6bn cash uplift for NHS England spending next financial year, as was announced in June. But they also strongly suggest there will be no concomitant uplift for health budgets which fall outside the NHS England ringfence in 2019-20. This has been the policy of recent years, which has seen capital, training and public budgets cut away.
• Departmental budgets for 2020-21 and beyond are still up for grabs, though, meaning negotiation will continue over these all-important spending categories in the run up to next year’s government spending review. The Budget document said: “The government will consider proposals from the NHS for a multiyear capital plan to support transformation, and a multiyear funding plan for clinical training places. The government will also ensure that public health services help people live longer, healthier lives. Budgets in these areas will be confirmed at spending review 2019.”
• On social care, an additional £650m was allocated to local government in 2019-20. The chancellor also confirmed that the much delayed social care green paper would be published soon, and set out difficult funding choices for the future (not actually make the choices, of course).

Making an NHS omelette

Last December, a senior Department of Health and Social Care official said trusts should not be “overly worried” about having income withheld to fund the new NHS Supply Chain’s operating costs.

Jim Craig told an audience at the Health Care Supply Association’s winter conference that the impact on trusts would be “quite small” and indicated savings would start to be felt in 2019-20.

However, 11 months later, a handful of trusts may beg to differ after finding they face making a net loss from the implementation of the new NHS Supply Chain model next financial year.

These trusts, of which HSJ understands there are around 20, could rack up losses between six and seven figures, depending on the model’s success.

Viewed through a national lens, the old proverb about breaking eggs to make an omelette springs to mind.

After all, less than 10 per cent of trusts are negatively affected, and their net losses are very small compared to their overall turnover.

A tale of two trusts

Tension between academic teaching hospitals and the wider system is nothing new. But south London gives two recent examples of the difficulties of reconciling such frictions.

Guy’s and St Thomas’ Foundation Trust has banned some referrals into its specialist paediatrics service in response to high demand from outside its inner south London boroughs. It is considering restrictions on some other services too.

Sources say work from overheated south east England district general hospitals and work that might otherwise have gone to King’s but for its huge waiting list problem now comes to GSTT. Not only this, but similar problems at Barts and Imperial have seen an increase in work from north London. 

Meanwhile, GSTT’s neighbour to the south has also got capacity problems. Too much work in urology at King’s College Hospital FT means patients are now re-routed to GSTT, while orthopaedics work is so overheated that the Royal National Orthopaedic Hospital in deepest north London is being considered for treating patients. 

Slow networking

The NHS has already spent more than four years trying to move off the old national IT network, N3, onto a cheaper new replacement.

But the £700m project is now six months behind expectations, putting the target to move every organisation over by August 2020 in doubt.

The contract for N3 (provided by British Telecom) – to essentially provide internet and networking access for the NHS and much of social care – is the sort of thing health and social care secretary Matt Hancock has repeatedly riled against.

It is a long contract with a single supplier, which has been so difficult to exit that it has been extended twice, for a cumulative six years.