The Liberal Democrats are calling for the 2015-16 funding settlement for the NHS to be “in effect reopened” amid fears that an imminent cash crisis could lead to declining access to NHS services and staff layoffs.
The announcement came as the party leadership called for a £1bn real terms funding increase for the service for 2016-17 and 2017-18, and suggested greater rises should come in the final years of the next parliament.
HSJ understands conversations are ongoing at the highest levels of government about the possibility of some providers running out of cash, and how this can be avoided.
Care minister Norman Lamb told HSJ that extra funding for the NHS in 2015-16 will be the Liberal Democrats’ “top priority” in coalition negotiations in the run up to this year’s autumn statement, scheduled for 3 December.
Mr Lamb said this would amount to “in effect reopening the [NHS’s] settlement for 2015-16”.
However, he added he was open minded about whether increasing the total resource allocation to the NHS would be necessary, or whether a funding increase could be achieved by other means.
Another well placed source told HSJ that additional funding could take the form of an extra fund for “winter pressures”, which was phased to take into account the pressures on the NHS that now exist all year round.
Mr Lamb said access to services could be hit if the NHS did not get more money and that it was important to send an early signal to the system that there would be more resource available next year.
Acute sector performance, activity data and finances all pointed to the need for more resource in 2015-16, he added, but would not say how much money the NHS needed to stay solvent in 2015-16.
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“The system has to know now, or soon this autumn, that there will be additional resource… We all know the potential consequences if the system does not have enough resources. It means the impact on patients will be very serious,” he added.
“It means longer delays waiting for treatment, it means poorer access to your GP to act in a preventative way. It results in more cost to the system ultimately, because more crises occur… the whole thing becomes a vicious circle – a downward spiral where we continue to spend money at the wrong end of the spectrum. The argument in a way is to invest to save.”
Mr Lamb said the NHS “has performed remarkably well” over the past four years, “but there is a limit to that, and you can’t keep relying on pay restraint as the economy grows”.
HSJ understands that there are concerns in Whitehall that providers already in deficit are expecting to run out of cash during 2015-16, and that some trusts are already preparing plans for dealing with this.
Anita Charlesworth, chief economist for the Health Foundation, told HSJ that a provider that runs out of cash “will be in a position where they can’t pay their bills.
“Patients don’t notice a deficit but they will notice a cash problem if the government does not step in, because the trust would not be able to pay their staff.”
Ms Charlesworth added that a signal from government that there would be more money in 2015-16 would be better for financial discipline in provider trusts, as there would be greater efforts to contain cost pressures if they feel it is achievable than if they do not believe the financial gap can be bridged.
In addition to their lobbying for 2015-16 this autumn, the Lib Democrats will today also table a motion at their annual conference in Glasgow, which starts today, committing the party to spending an extra £1bn over and above real terms for 2016-17 and 2017-18.
The motion would amend the Liberal Democrats’ “pre-manifesto” document, and will become party policy if the conference votes in favour of it.
Most of the extra cash would be used to support service transformation, to help the service adapt to an ageing population increasingly living with multiple long term conditions.
Beyond 2017-18, real terms rises for the NHS would reflect growth in the economy.
Chief secretary to the Treasury Danny Alexander said the investment would help deliver “a joined up service around patients which ensures GPs, hospitals, district nurses and physiotherapists work together”.
It would be paid for via measures to limit tax relief on pension pots for high earners, adjusting dividend tax for top rate taxpayers, and ending tax exemptions on shares bought in exchange for employment rights.
Extra investment beyond 2017-18 would come once, as forecasted, the national deficit has been eradicated.
The Liberal Democrat conference will vote on the policy on Sunday at 5pm.