Little mention of healthcare in the budget is newsworthy in itself, especially considering we have experienced a decade long austerity drive, argues Conor Ellis

The fact that there was little mention of healthcare in the budget was in itself newsworthy.

Conor Ellis

Conor Ellis

Health department spending is in the midst of a demand led recession, despite political prostrations.

The fact that health department spending has increased by 2.5 per cent representing £2.5bn, up from £109.3bn in 2014-15 to £111.8bn in 2015-16, will make precious little difference to the stability of the system.

The fact is, we have experienced a decade long austerity drive that has been unparalleled in Organisation for Economic Co-operation and Development history.

Gaping holes

Over the course of this Parliament we have seen an average increase of 0.8 per cent in real terms, including inflation.

This is way below the near 6 per cent in successive Parliaments, and even lower than the 3 per cent under the 1980s and 1990s Conservative governments. In fact, it is the lowest real term rate of any Parliament.

‘The failure of the NHS emphasises the scale of the issue’

One only has to see the scale of the NHS’ expected deficit in 2015-16, which has been forecast to be as much as £2bn with trusts the size of Bart’s Health already in “special measures”, to realise that today’s budget is aiming to paper over gaping holes rather than cracks.

The failure of the NHS to have an agreed tariff with providers from April, combined with opposition amongst the foundation trust care providers, only emphasises the scale of the issue.

Some positives

However, there have been some positives.

The investment of £1.25bn in children’s mental health, for example, is to be welcome.

Given the scale of need for this care group, it should make a fundamental difference to another 100,000 children by improving both access to, and scale of, local available services.

‘The lack of capital spending remains one of the most pressing concerns’

Meanwhile, many parts of the NHS will be moving towards more joined up care integration in the next Parliament, and this will drive both efficiency and better provision of care.

The recently announced Manchester devolution is one such example of how we might see social care integration playing out in future.

Yet despite this, the lack of capital spending still remains one of the most pressing concerns, particularly given the recent government claw back of a figure reportedly in excess of £600m in 2014-15.

With a significant risk of backlog, there is a real danger that parts of the NHS will fail to achieve safe and legal standards, no less provide the environment expected of 2015 healthcare for patients to be treated and staff to work in.

Consider quality

While the £4.8bn increase in capital expenditure allowance in 2015-16 is indeed helpful, it is a long way from the £6.1bn capital spend we saw from the NHS in 2009-10 (plus private finance initiative), albeit slightly up from the £4bn of 2014-15.

It means that, overall, from the period 2009-10 to 2015-16, we have seen a 22 per cent cut in capital expenditure, plus the inflation dimension. At some stage there will be consequences if investment is not made in justified and proven capital projects.

The mixed messages to private sector providers are curious.

‘The case for new investment can only benefit NHS resources’

Waiting lists are growing, and “choose and book” is becoming popular if the private operators can clear capacity for tariff levels.

However, as long as patients themselves are treated free at the point of delivery, is this a public issue?

The case for new investment, welcomed by many trusts with small scale private patient units, can only benefit NHS resources by providing free cash flow and assisting with the sharing of vital equipment that the NHS may struggle to pay for.

The issue going forward is whether or not there is to be proper contestability for new NHS contracts, which the rest of Europe achieves via mixed competition for public sector work.

However, one accepts that this is perhaps more of an ideological and quality consideration rather than a fiscal matter.

Conor Ellis is global head of health for EC Harris