True integration must start with the local economy

Whisper it quietly, but the NHS might be about to come into some new money. The prime minister has promised the NHS a suitable present to mark its 70^th birthday as part of a new 10-year plan. Perhaps, it will be enough in the eyes of our service leaders, perhaps not – we await the details.

In the meantime, spare a thought for our councils. The inability to pass the Local Government Finance Bill before last year’s snap election is still being acutely felt on the ground. All local authority leaders know is that the Revenue Support Grant will disappear by 2020 – in 18 months’ time.

This central government funding will have shrunk by 77p in the pound between 2015 and 2020, with almost half of all councils not receiving a penny in the next financial year. Staggering numbers that bear no relation to the increasing demands placed on local authorities by communities, the government and of course the external, Brexit-themed world.

From national to local financing

Replacing this current system of national grant funding will be new powers to raise more revenue locally, including through taxation. We will come on to whether this is enough later, but first let’s explore the policy.

A central part of the increasing decentralisation (a more fitting term than devolution) of governance in England is the ability to grow one’s own economy: places empowered and incentivised to raise money locally, so that they can spend money locally and in the areas that matter locally.

Certainly, town hall leaders understand their “place” far better than Whitehall, and demanded for a “Devo” deal stretched right across the country when the government invited bids in 2015.

In short then, increased local powers and responsibility are welcome.

A central part of the increasing decentralisation (a more fitting term than devolution) of governance in England is the ability to grow one’s own economy

The first tax that the government chose to localise (and probably the most complex) was business rates. From April 2018, in many parts of England, local authorities are now piloting 100 per cent Business Rate Retention, meaning the growth in rates they manage to generate locally will stay local.

The government has also just finished consulting on its “Fairer Funding Review”, which will introduce 75 per cent retention of business rates across the rest of the country (primary legislation is required to roll-out 100 per cent retention everywhere). Let’s see what they say.

Now, it gets interesting. This additional, business rate-derived income, will finance local statutory duties that the NHS depends on, such as public health and adult social care. A direct and local link now exists between the industrial strength of a given, local economy and core public services provided to its citizens.

Business rates are proving controversial at the moment with many NHS trusts seeking to minimise their local contributions, in line with those providers registered as charities. In my experience, this backdrop isn’t always well understood at NHS board level.

This additional, business rate-derived income, will finance local statutory duties that the NHS depends on, such as public health and adult social care

It is this context, of course, in which the Social Care Green Paper will shortly be launched. In my view, simply calling for more money nationally does not seem to fit with the government’s preference for the localisation of finance.

I asked if this would be enough earlier. The short answer is “no”. The LGA estimate a funding gap of around £5bn by 2020, which would mean further reductions in services even where maximum council tax increases had been imposed. Talking about integrating local services without talking about the local financing of them is, it seems to me, missing the point.

What can the NHS do about this?

Well, as around 10 per cent of every local economy, quite a lot. Directly, at least understanding the power of NHS supply chains, local employment and the business development opportunities associated with local innovation strengths is critical.

The economics of this are pretty simple. Decisions on what we buy, where we buy it and who we buy it from matter to the local economy, whether we know it or not. Locally employed people invest their salary locally. Businesses will locate, thus employing and paying more, where they can develop worthwhile partnerships.

If a trust wants to minimise its business rates, for example, these are the arguments they should be making to their local authority colleagues.

This role in raising prosperity across a local place is surely the central cog in how integrated care systems can support plans for population health management

Thinking more strategically, this role in raising prosperity across a local place is surely the central cog in how integrated care systems can support plans for population health management. Enrich your area and its communities and they will be healthier, happier and more productive.

Your demand will be reduced, while local authorities will see extra local investment in the core, statutory duties that blur the lines between health and social care. Local integration driven by local growth.

I am supporting some early developmental work in parts of England that see this as their best chance of generating the trust, vision and alignment needed to truly shape local services across a place. Much of what I have seen to date is highly replicable and the lessons will be shared in time.

For now though, the NHS shouldn’t expect its forthcoming plan, no matter how detailed, to initiate discussions about the needs of a local economy. Pick up the phone and see for yourself how welcome these are.