The Treasury may redefine the ringfence on NHS spending to apply only to NHS England’s commissioning budgets – leaving billions spent on public health, training and research unprotected in the coming spending review, health think tanks have warned.

  • Treasury officials are now defining protected NHS spending as NHS England’s budget alone, not entire Department of Health budget, think tanks warn.
  • This would mean huge budgets – including £4.9bn for health education and £3.7bn for Public Health England– were unprotected by government commitment to £8bn increase in NHS spending.
  • Nuffield Trust, King’s Fund and Health Foundation warn that cutting these budgets could have severe impact on NHS providers and success of the NHS Five Year Forward View.

Senior figures at two leading think tanks told HSJ they had been given direct indications by government officials that the Treasury was defining protected NHS spending as including only NHS England’s £101bn budget for commissioning health services.

They warned this would mean some huge budgets for Department of Health funded organisations, including Public Health England and Health Education England, were not covered by the government commitment to increase NHS spending by £8bn in real terms by 2020-21.

A Treasury spokesman said this evening that the government had “absolutely no plans” to depart from its practice to date of year-on-year real terms increases to the DH’s budget. However, he did not answer HSJ’s direct question about whether the commitment to an £8bn real terms increase applied to the DH’s budget, or only to that of NHS England.

Nuffield Trust chief executive Nigel Edwards said he had been told by several civil service sources that Treasury officials were using the latter definition.

He said: “My interpretation is that the ringfence only includes the budget going to NHS England.

“Our concern is that the way they have carefully described the ringfence allows them to take large amounts of money out of training, public health, and research and development without breaching their promise on spending on the NHS – except that large amounts of the money from those three budgets go back into NHS care.”

He gave the example of the £4.9bn HEE budget, noting that much of this money went to NHS providers and some paid for junior doctors and nurses who were providing care while they learned.

“We’re talking about billions of pounds here that end up back in the NHS,” Mr Edwards added. “We have concerns [that] that’s at risk.”

King’s Fund chief economist John Appleby told HSJ he had also been given indications from government officials that the Treasury was looking at the £8bn commitment in terms of an increase to NHS England’s budget.

This definition, he said, “left out public health, all of the [DH] arm’s length bodies from [National Institute for Health and Care Excellence] through to Monitor and HEE, and capital”.

He highlighted that the Treasury had already cut £200m from council controlled public health budgets this year. The move was billed as a saving on “non-NHS” spending.

Anita Charlesworth, chief economist at the Health Foundation, said her organisation was also concerned to emphasise the ringfence should apply to the DH’s total departmental expenditure limit (TDEL) – its combined budgets for revenue and capital spending, minus depreciation – and not only to NHS England.

She said: “The temptation for them clearly will be – as they did last year – to cut areas like public health in the name of protecting so called frontline services.”

She pointed out that the success of the NHS Five Year Forward View was “predicated on having an effective public health system”. She added that the £22bn of savings that NHS bodies have committed to were “undeliverable without an effective training and education system to ensure we have enough staff employed on a permanent basis, to ensure we don’t overspend on agencies”.

Mr Edwards suggested one area of education spending that might be vulnerable if unprotected was the provision of bursaries for student nurses.

There was, he said, potentially benefit to restructuring the way that nursing education was reimbursed. However, he added: “There is an opportunity to get this very seriously wrong if it is driven by the spending review [and the need to make immediate savings] rather than a developed workforce strategy.”

Defining the ringfence as applying only to NHS England budgets would be a departure from past practice. The previous coalition government defined its commitment to protect health spending in real terms as applying to the department’s TDEL.

The current government’s election manifesto stated that it would “continue to increase spending on the NHS” and “spend at least an additional £8bn by 2020 over and above inflation to fund and support the NHS’s own action plan”.

According to the Health Foundation’s submission to the comprehensive spending review, PHE’s budget is £3.7bn this year. HEE’s budget is £4.9bn, and there is a further £9.7bn in DH budgets outside that of NHS England covering capital expenditure, arm’s length bodies and DH administration.

The Treasury spokesman said: “The government is committed to delivering security for working people – the economic security of a country that lives within its means and the security that comes from a properly funded National Health Service.

“That’s why we’ve taken action to protect the funding the NHS receives and increase the Department of Health’s budget in real terms year on year. We have absolutely no plans to change this.

“The forthcoming spending review will set out how the government will continue to invest in priority public services including the NHS, whilst delivering the further savings required to eliminate Britain’s deficit by 2019-20.”

This story was updated at 9.40pm on 17 September 2015, following late receipt of a comment from the Treasury.