Chris Hopson: The NHS is caught in an impossible trap

The forthcoming budget on 22 November is an important moment for an under pressure NHS. As the Care Quality Commission’s authoritative State of Care report argued earlier this month, care quality is becoming more precarious as pressure grows.

The budget is an important opportunity, at the beginning of this Parliament, to protect care quality and help the NHS break out of the downward spiral in which it is currently trapped.

We all know money is incredibly tight. We must therefore be clear about priorities. Trusts tell us there are three key issues, with the first being capital. We are already on a promise here, from the spring budget. Thank goodness, as the safety critical backlog maintenance bill has doubled in just two years to nearly £1bn. 

Courting capital

The full backlog is now an eye watering £5.5bn. You just have to walk around pre-World War II buildings, as I did at a trust this week, to know how important it is to start tackling this backlog now and not leave it for yet another year. Sir Robert Naylor argued that a further £5bn of capital is needed to expand capacity to meet growing and changing demand, and transform services, bringing care closer to home. 

We need to be careful about how much we rely on land sales and private capital to fund the required investment. Land sales will take time to complete and receipts will, inevitably, be strongly concentrated in London and the south east. 

We need to be careful about how much we rely on land sales and private capital to fund the required investment

We must also guard against only allocating funding to the more developed sustainability and transformation partnerships, as we did with the first £325m capital instalment. Patients, populations and providers in STPs that have understandably taken longer to come together have pressing capital needs, too. We mustn’t ignore them.

Fully funded pay rise

The next big issue for the Chancellor is pay, which takes up the lion’s share of NHS trust costs. Any pay increase therefore has big financial implications. As the recent Union claim has shown, when long running pay caps end, there is pressure to catch up for lost increases. But we simply cannot afford a pay bonanza. 

Trusts have told us, and this cannot be stressed too much, that any pay increase must be fully funded. There is a serious risk that ending pay restraint eats up most or all of the extra NHS £8 billion promised in the Conservative manifesto. This cannot happen when we have so many other pressing demands. 

There is a serious risk that ending pay restraint eats up most or all of the extra NHS £8 billion promised in the Conservative manifesto.

We, therefore, have really difficult decisions to make here – for example thinking about targeting any pay increases to areas of workforce shortage or lower paid groups – and then supporting trusts to manage the consequences. It’s particularly important that decisions are made with rigour and careful thought. Trusts support the Pay Review Body mechanism as the best way to ensure this.

Match targets to available funds

The third, and probably most pressing, concern is matching what the NHS is being asked to deliver to the funds available. Just this week, the BBC has reminded us that the NHS is, for the first time ever, now consistently missing all its key acute hospital and ambulance performance targets. 

The pressure on community and mental health services is just as great – the only difference is that they don’t have such well established targets. It was telling that the BBC coverage reinforced the point that trusts want to keep and meet the targets. But they can only do so with the right level of funding.

The NHS is caught in an impossible trap – there isn’t enough funding to cope with rising demand and meet performance targets but it’s yet to be widely accepted that the targets are undeliverable without the extra funding. This risks eroding public confidence in the NHS but also putting trusts and frontline staff in a position of inevitably failing, however hard they try.  

I’d love the budget to set out a clear plan on how to resolve this conundrum for the rest of the Parliament – matching the NHS delivery ask to the funding envelope for each of the next four years. But any prudent chancellor will want to preserve their flexibility to deal with any Brexit induced macro economic shock. So, the argument will be about 2018-19. 

There is widespread consensus across the NHS, led by Simon Stevens, that the service needs more revenue funding in 2018-19 and 2019-20 as per capita NHS funding is currently planned to actually fall, not increase. 

But there is another trap here, too: what we promise to deliver in return for any extra money. The NHS is suffering badly across central government from the sense that we overcommitted in the spending review with bold assumptions on reducing demand and generating savings, and then failed to deliver. 

It’s vital we don’t do the same again. National leaders will come under enormous pressure to recover the RTT and A & E performance standards – and much else besides – in return for any extra revenue funding. Any commitments must be properly costed, fully assured and agreed with the frontline leaders who will be accountable for delivering what is promised.

There is never any lack of advice for the chancellor at budget time. No one is pretending this is easy, marshalling scarce resources at a time of such political uncertainty. But if the challenges are great, so too is the opportunity to restore the NHS to health.