New funding for the NHS: what happens next?

In June, the Prime Minister gave the NHS what appeared to be a very generous 70th birthday present – the promise of a new long-term funding settlement worth an extra £20.5 billion a year by 2023–24. When set alongside other public services such as local government, education and defence for whom Treasury coffers have remained all but firmly shut, the NHS is regarded as having had special treatment, bucking the public sector austerity trend.

The birthday gift, although very welcome indeed, was not however as bountiful as it first appeared. Expert health economic analysis has calculated that the additional 3.4 per cent per year will not be enough to bring about the wider change needed to modernise and improve care for the longer term. The new money will in significant part be needed to address existing deficits in NHS organisations’ funding, undertake additional work to reduce NHS waiting lists and ensure that essential backlog maintenance of buildings and equipment is undertaken.

Two billion pounds of the new funding has been designated for investment in mental health services, including to establish new mental health crisis services in hospital accident and emergency departments. This is welcome news, for expert analysis has long highlighted the lack of parity in funding for mental health care, and more recently, the particular needs of children and young people.

In anticipating the 2018 Budget, we wondered if other elements of funding that affect NHS services would get much-needed investment, such as public health and prevention, staff training and - most significantly - social care. While it seems very likely that prevention of ill health will play a central role in the upcoming Ten-Year Plan for the NHS, it is of note that funding for public health has been reducing in recent years and does not gain from the recent Budget settlement.

Social care awaits (yet another) green paper on its future funding and strategy, and an extra £650 million was allocated to adult social care in this Budget. But this is only a fraction of what is needed, and all the signs are that while social care desperately needs reform, it remains in the ‘too difficult’ tray for the government.

We now know that the public will not be asked to pay higher rates of income tax and national insurance to find this new money for the NHS. While this may be politically more palatable, it effectively lets voters off the hook of understanding what is really needed to enable a sustainable NHS.

So the government has thrown down the gauntlet to the NHS. As I wrote in a commentary on the Prime Minister’s NHS funding announcement in June, to those whom much is given, of them much will be expected. In the context of very constrained public finances, this would seem to be even more the case. We can be sure that the allocation of substantial new funding to the NHS is intended by politicians to bring an end to NHS ‘winter crises’, reduce waiting lists for operations and treatments for cancer and enable significant improvements in mental health care.

However much the NHS needs additional funding to ease profound pressures, it now has to grasp the nettle of how to change and modernise services to assure politicians and the public of its response to the challenge posed. We can expect the forthcoming Ten-Year Plan for the NHS to propose innovations such as: more rapid adoption of information technology within NHS administrative systems; new general practice services accessible by app or email; extensions to mental health crisis support, and imaginative and sustainable solutions to the persisting lack of coordinated services across community and hospital care.

Longer term, if the NHS swallows up this £20.5 billion without making demonstrable and evidence-based improvements to how at least some services are provided, it risks losing the faith and support of politicians and the public who know that there are many competing calls for scarce public funding. The gauntlet has been thrown down. How it is picked up by NHS leaders on behalf of the patients and public they serve is what really matters about the NHS’s 70th birthday present.

Professor Judith Smith
Director of the Health Services Management Centre, University of Birmingham