The government will give the NHS £2bn less in real terms over the next five years than it previously said, having pushed back the planned funding growth, HSJ can reveal. However, cash will increase by £1.5bn over that period.

Planning documents published by NHS England this afternoon state that its budget will increase by 3.1 per cent in real terms in the second year of the period, as opposed to the 3.6 per cent that was proposed in the government’s high profile announcement last summer.

The largest annual increase, of 4.1 per cent, has instead now been reserved for the final year of the plan, in 2023-24, when an increase of 3.4 per cent was previously slated.

This will result in cumulative real terms spending over the five years being around £2bn lower than previously envisaged. In 2018-19 prices, cumulative spending will be around £632bn over the five years, rather than £634bn.

HSJ understands there have been negotiations between the NHS and government about the inflation assumptions that were built into the planned funding envelope. NHS England has pushed for additional money to cover these pressures, and the amended phasing may reflect these negotiations. 

It is understood the funding settlement will now be larger than expected in cash terms, by £250-£300m in the first year, and around £750m by the fifth year, to cover the additional inflation pressures. The cumulative cash increase over the five year period is around £1.5bn.

The new phasing still represents an average real terms increase of 3.4 per cent each year, and still meets the government’s headline pledge for the NHS England budget to rise by £20.5bn in real terms after five years. The percentage increases previously proposed were phased as follows: 3.6 per cent, 3.6, 3.1, 3.1 and 3.4.

But the new NHS England document states: “CCG allocations are being set on the basis of NHS England’s five-year real terms revenue funding profile, which has now been set by government as 3.6%, 3.1%, 3.0%, 3.0% and 4.1%.”

NHS England plans to publish fuller details around its funding settlement at its board meeting later this month.

Saffron Cordery, deputy chief executive of NHS Providers, said: “The five year funding settlement for the NHS – while welcome – does little more than cover rising costs and demand.

“It was already clear that achieving the ambitions set out in the NHS long term plan, published this week, would be extremely challenging. Any erosion of health service funding will only make the task that much harder.”

NHSE has been approached for comment.