With the budget approaching, austerity still biting and the deficit not shifting, the NHS is not the only institution fearing a tough end to the year
The 2017 Budget is set for Wednesday 22 November, and the political run-up is well under way, with minimal let-up for the party conferences. Minimal let-up does not mean minimal fear, particularly not in Number 10 Downing Street and in the Treasury. The UK is still in significant debt, after almost seven years of austerity.
Readers with memories will probably note that in 2010, the Conservative-led Coalition Government aimed to eliminate the deficit by 2015. On the current trajectory, the present Government is on course to miss the former Labour chancellor Alistair Darling’s 2010 plan that the deficit would take a decade to pay down.
The bill to end austerity? £33 billion a year
The respected Institute for Fiscal Studies suggested in July that Chancellor Philip Hammond may have to increase taxes by £33 billion a year if he wants to end austerity.
To put this into a meaningful context, a 1 per cent increase in all rates of income tax would raise £5.5 billion; a 1 per cent rise in NI would raise £4.9 billion and a 1 per cent rise in the main rate of VAT would raise £5.2 billion.
So a two per cent rise in each of the three big taxes would almost serve to raise the money.
There is also the highly unresolved issue of funding adult social care. It has been cut by 7.9% between 2009-10 and 2015-16. One in ten councils has cut adult social care spending by more than a quarter.
O reason not the need!
How does all of this stack up to what we actually need to spend?
That’s the £33 billion a year question, isn’t it? The IFS’ pre-election analysis is a substantial piece of work, which concluded that “all these planned increases in health spending are well below the long-run average; historically, UK health spending has grown by an average 4% per year in real terms… the next parliament will therefore continue to be an incredibly challenging period for the NHS, regardless of who wins the election”.
The future isn’t what it used to be
So let’s imagine the thinking under way in the yoga rooms of power (corridors of power are so 2000s, darling!). And to give us a frame of reference, let’s use Derek Wanless’ three categories from his seminal 2002-4 report for HM Treasury.
A “slow uptake” scenario means things about capital spending in particular: there basically still wouldn’t be any. Joint work by the Health Foundation and Kings Fund showed that “capital spending in the NHS has fallen by more than 20% in real terms over the last three years. Without access to sufficient capital funding, the NHS now has an estimated £5bn backlog maintenance bill”.
Mr Hammond also told the Commons, “the government will set out its thinking on the options for the future financing of Social Care in a Green Paper later this year… we are still waiting.
Slow uptake would also mean that the ongoing NHS workforce crisis would, well, go on. You might get a few more physicians’ assistants, although the impact on the government’s abolishing nursing bursaries appears to be significant.
This is to say nothing of double running costs, while new services are being brought up to speed.
The likely practical consequences of this could include a revisiting of both the brand and concept of STPs. In this event, more radical action to avoid massive NHS overspends re-emerging would probably be needed.
A “solid progress scenario” might seem some meaningful delivery from Chancellor Philip Hammond’s pledge back in March that “in addition to the funding already committed, some of those plans will require further capital investment. So the Treasury will work closely with the Department of Health over the course of the summer as the STPs are progressed and prioritised. And at Autumn Budget I will announce a multi-year capital programme to support implementation of approved high quality STPs.”
Of course, in that same speech Mr Hammond also told the Commons, “the government will set out its thinking on the options for the future financing of Social Care in a Green Paper later this year… those options do not include, and never have included, a Death Tax”.
There is, after all, not much of “this year” left. We are still waiting.
There would also have to be progress on both pay and workforce training/retention. None of which would come cheap.
But perhaps one shouldn’t pay too much attention to Mr Hammond’s speech, in which he claimed “we are the government of the NHS”, when everybody knows that NHS Commissioning Board’s Sun King chief executive Simon Stevens is the real government of the NHS.
A “fully engaged scanario” feels so distant, it is genuinely hard to imagine. But then again, so did the Corbyn supremacy, the Trump Presidency and Brexit. The future of politics isn’t what it used to be.
The conversations under way between The Sun King and the representatives of power in Number 10 and HM Treasury are undoubtedly quite funky. We shall see whether they lead to some rhythm, or to something altogether more pungent, in the original sense of the word.
The clock is ticking. It always does.
The fear that I mentioned in the opening paragraph smells too. It always does.