Chancellor's funding announcement 'plugs some holes' in NHS budget

In his budget statement this afternoon, Philip Hammond said the new funding is being provided “exceptionally”, which means it does not represent a permanent uplift to the Department of Health budget.

The new funding will be split over three financial years, with one-off and non-cumulative increases to the existing planned budgets in each year. The current year’s budget will increase by £335m, to help the NHS cope with winter pressures. 

The budget that was previously planned for 2018-19 will increase by £1.6bn, with the 2019-20 planned spending limit rising by £900m.

NHS leaders had insisted an extra £8bn was needed over this period just to maintain day to day services, while the King’s Fund, Nuffield Trust and Health Foundation agreed £4bn was needed next year alone. NHS England chief executive Simon Stevens also appeared to support an uplift of this order.

The budget document says the funding “should enable the NHS to meet the accident and emergency four-hour target next year, make inroads into waiting lists and improve performance against waiting time targets.”

HSJ understands that of next year’s £1.6bn increase, the government intends that £1bn should be used to stop the decline in performance for elective care, and £600m to help hospitals meet the A&E target.

The extra money ensures NHS funding will increase in real terms per head of population in the next two financial years, as was pledged in the Conservative manifesto. Under the previous spending review settlement there would have been a per person cut in real terms funding.

The non-recurrent nature of the new funding leaves uncertainty around the DH budget beyond 2019-20, although they are likely to become recurrent if the longer term manifesto commitments are met.

Meanwhile, the government said new money will be set aside separately to fund a pay rise for more than one million NHS staff, but only if unions agree to reform the Agenda for Change contract.

HSJ understands that pay for doctors and medical staff contracts will be treated differently and any increases would have to be funded from the existing settlement.

Sir Bruce Keogh, national medical director at NHS England, has said on Twitter this afternoon: “Personal view…Budget plugs some but def not all of NHS funding gap. Will force a debate about what the public can and can’t expect from the NHS. Worrying that longer waits seem likely/unavoidable.”

Richard Murray, director of policy for The King’s Fund, said: ‘The additional money for the NHS is a welcome shot in the arm as it struggles to meet rising demand for services. But it is still significantly less than the £4 billion we estimate the NHS needs next year. Even with this additional funding, the service will struggle to meet key targets and provide the investment needed in services such as general practice and mental health.”