Andy Cowper gives the lowdown on the recently announced Budget and where did the extra NHS money in the Budget come from
It is sad to have to write this as news is filtering out of the untimely death of former Cabinet secretary and civil service head Jeremy Heywood. As former health and social care secretary Jeremy Hunt rightly tweeted today, Heywood’s role in securing the NHS funding boost was significant. He was a proper public servant, and an evident grown up. There should be more of it about than there is of late.
So I thought that some arsing about with income tax thresholds would be some of the solution to finding more money for the NHS.
But I also thought there would have to be candour about tax rises.
And I was wrong. And I never have any problem with admitting that.
Towards more borrowing
So, where did the extra NHS money in the Budget come from?
In a word, borrowing.
The Office for Budget Responsibility has the data. POLITICO London editor Jack Blanchard noted that “the Government got a massive windfall from tax receipts and blew the lot on the NHS”. Sam Coates of The Times thinks that the OBR analysis means that “Philip Hammond received a big boost from forecasts - and spent it all”.
Old stagers will recall that when Richard Douglas was Department of Health director of finance, he had a magical way with the back of a notional sofa down which money could be found to balance the books when essential.
It’s at times like these that we need experts, and Paul Johnson of the Institute for Fiscal Studies is just such a man. Johnson was clear that the UK is now near the bottom of the G7 for economic growth. And as HSJ readers know, economic growth pays for public spending.
Johnson’s respected Institute for Fiscal Studies calls the chancellor’s move a gamble. Johnson further adds that “health is taking a bigger and bigger share of public service spending up from 23% in 2000 to 29% in 2010 and planned to hit 38% by 2023. At some point this is going to require higher taxes. We can’t just keep squeezing everything else”.
What our good chum Sumproduct Phil has shown is that he is a newly converted devotee of top former DH finance maestro Richard Douglas’ magic sofa, down the back of which more money can always be found.
Towards fiscal fantasy
As regular readers know, I have been highly critical of the government’s using nonsense figures about NHS funding increases.
Nor am I alone in such criticism.
As such, one might hope it would embarrass a serious government to carry on with the same nonsense. But alas, that is not the case.
So apart from more borrowing/spending every extra Euro, where does the “new NHS money” come from?
Capital gets raided, as a former rector of this parish David Williams, now of NHS Providers, neatly observed:
“An unexplained reduction of £500m… my namesake at the DHSC said on Oct 17 they were going to switch £500m from the capital budget to the revenue this year, so that would explain the cut to the capital budget. But what it wouldn’t explain is why the revenue budget hasn’t increased by £500m… not £500m more as you might expect, but actually reduced by £200m”.
This is now a view from the fringe shores of public policy wonkateria: the BBC’s reporting noted that there are clear cuts as well as gains.
If you want some real access to nonsense numbers, you scroll down this BBC News story to learn that “a government source said that the numbers in the Budget did not include sources of income, including surcharges for immigrants, which could be passed on to areas like public health.”
If not ahem, ahem.
So, what happens to capital funding, which is crucial to no small amount of NHS performance issues?
Delays, is the short answer from the Health Foundation’s ex-Treasury expect Anita Charlesworth.
More broadly, on the Budget finances, HSJ ran the numbers and it is not pretty. It is also worth reading the Kings Fund’s social care lead Richard Humphries’ thoughts on the Budget’s implications for social care.
They are not pretty.
The natural party of the NHS
You haven’t yet had enough of the NHS and politics? Of course you haven’t! More fun!
So here we go! Writing for The Mail, prime minister Theresa May suggests that “we made the largest-ever cash commitment to our public services by a peacetime government: an extra £394 million every single week“.
Oh very dear.
This number of £394m/week can only be obtained by taking the extra funding level that is finally reached in 2023-4 (just over £20bn), and dividing by 52. So, it’s seriously misleading. It takes five financial years of 3.4 per cent rises to get there.
As Nuffield Trust chief economist Professor John Appleby noted, this means “(And then divide by 5 as 20.5bn over 5years - ie 260 weeks) 79m *extra every week*)“
More to the point, the Health Foundation analysis finds that there is actually a £1bn real terms cut next year, “This is not a technicality; it will mean reductions to spending across public health, workforce training and capital investment in buildings and equipment of £1bn. All of these areas directly impact on patient care and health services”.
The HF analysis continues “the Chancellor’s announcement of a freeze on PFI leaves the health service with a potential £3bn hole in its capital investment budget. This follows major underinvestment in buildings and infrastructure as capital spending in the NHS has fallen by more than 20% in real terms over the last three years.
“Extra investment in mental health services will see funding grow broadly in line with the total health budget but this will mean simply maintaining the status quo which sees just 4 in 10 people who need it receive mental health support. To see some improvement, with provision increasing to 7 in 10, the service would need an extra £1.5bn on top of what the chancellor has announced.
“Social care will see an estimated 2.9% in real terms increase next year. While welcome, this falls far short of rising pressures of 3.9% per year and offers little scope to address unmet need or improve quality. Drip feeding short-term cash injections is not the way to manage this vital public service. It will not address the manifest unfairness in a system which leaves those in need without help and provides no protection for people from catastrophic care costs.
“While additional money has been pledged for local authorities to deliver social care services, it is disappointing to see further cuts of £200m to public health services which have already seen reductions of £500m since 2014-15”.
Towards more taxes
The idea that greater public spending has no impact on income tax rates is a fascinating one, if not particularly comprehensible.
Readers will remember the May 2018 suggestion that meaningful public spending increases have to mean tax rises, from the NHS Confederation, Institute for Fiscal Studies and the Health Foundation.
In practical terms, they are still not wrong.
But of course, the government can no longer be expected to think in practical terms, as one of the best Labour health brains Karin Smyth
Nonsense numbers are nonsense. And we cannot start to make compromises with the War On Reality.
Towards health prevention
The Telegraph newspaper leads us to believe that a new strategy launches today focused on health prevention.
Which is nice.
But as Sheffield director of public health Greg Fell points out, “a medicalised response to a social and environmental problem is not good enough“
And once almost 40 per cent of junior doctors think bullying in the workplace is a problem, we are not talking about an issue of perception of presentation. Not by a long way.
Or if you want to get more of the environmental factors, just read Julia Unwin’s Carnegie Fellows report on Kindness, emotions and human relationships: the blind spot in public policy.
Or think about the implications of dropping the recording of PROMs, as health economist Professor Nancy Devlin outlines.
It is almost as if the NHS and public policy sphere more broadly needs a chief anthropologist more than any chief inspector.