HSJ’s roundup ahead of the comprehensive spending review

Wednesday’s government spending review will reveal hugely important details of funding for the NHS and the wider health and care system, notwithstanding prominent trailing of the big numbers for the health service today.

What we know already

We know the chancellor has sanctioned a real terms increase to NHS England’s budget of £3.8bn in 2016-17, but this is in part expected to be funded by further cuts to public health and changes to the system for funding nurse education.

This £3.8bn represents a significant frontloading of the £8.4bn promised over the next five years – and represents an attempt to address the immediate financial crisis in the provider sector.

HSJ has secured details of the spending profile over the following four years. These indicate 2018-19 and 2019-20 will be extremely tough, if the government sticks to this plan, as real terms growth is set to drop to £500m and £900m respectively.

George Osborne was bigging up the “half a trillion pound” settlement, while Simon Stevens was a little less hyperbolic, calling the deal a “highly welcome acceptance of our argument for frontloaded investment”.

HSJ editor Alastair McLellan’s verdict was that the negotiations were a success but “far from an unmitigated one”.

He writes that the NHS England chief executive and Jeremy Hunt deserve credit for turning around HM Treasury’s opening position that NHS funding should be backloaded.

He adds that Mr Stevens has been at the heart of “the four most important NHS policy decisions of the last 15 years” - namely the 2000 NHS Plan, the 2002 budget and NHS delivery plan, the Five Year Forward View and this week’s spending review.

But there are still questions, such as over the settlements for 2018-19 and 2019-20, which are among the lowest ever given to the NHS, and the expected redefinition of “ringfenced” NHS spending, the full implications of which are not yet known.

From 12.30pm on Wednesday, Mr Osborne will have to start answering them.

What to look out for

As a result of briefings to media on Monday evening, some of the big questions about what spending review announcement means for health have already been answered. However – as with all pre-briefings – there are still significant questions to be asked. Here’s HSJ’s view of the most important things to look out for:

What will happen to the Department of Health’s overall budget?

This is the big question. Information released so far indicates that the Treasury is now defining the “ringfence” on NHS spending as applying only to NHS England’s budget (of £101.7bn) and not to the Department of Health’s total departmental expenditure limit (of £116.6bn), as it was in the previous parliament. This would mean the same level of protection did not apply to public health spending, health education, or to the budgets of arm’s length bodies like Monitor and the Care Quality Commission. However, until figures are released for the DH’s budget over coming years, we do not know how much of the £8bn growth promised to NHS England is new money, and how much will come from a squeeze on other areas of department spending. Think tanks such as the Health Foundation and the Nuffield Trust have argued forcefully that big cuts to some of these budgets will have knock-on effects on frontline care.

How bad will it be for social care?

The Five Year Forward View is predicated on existing social care services being maintained. This is unlikely to happen – but the extent of the damage to social care will take some time to become apparent. We will find out on Wednesday how much council grants, which fund social care, will be cut by. However, exactly how much funding will be reduced by in each area will not be known until councils publish their budgets. The picture will be complicated by the likely announcement that local authorities will be allowed to raise council tax to fund social care.

Will social care benefit from the NHS funding boost?

In April, Jeremy Hunt told HSJ that social care would benefit from rising investment in the health service, potentially via budget pooling mechanisms such as the better care fund. The better care fund was announced in the last spending round: in this one we will find out what happens next.

Will the better care fund continue, and in what form?

The better care fund is likely to continue in 2016-17, at the same level as 2015-16 and uplifted for inflation. HSJ understands BCF pooling will exist as a minimum option beyond this year, too, but in later years most areas will be expected to have chosen more radical options for health and care integration, whether that be devolution arrangements, new integrated provider models, or something more different. Ministers have previously said bringing about the full integration of health and care services is their ultimate ambition.