The weeks before an Autumn Statement are always a time of plotting, bidding and begging in Whitehall as politicians and government departments squabble over spending and tax. But in that behind-the-scenes world which determines the millions and billions presented to the public, think tanks and journalists see a worrying trend that stretches back for years.
The paymasters in the Treasury and the ultimate arbiters in Number 10 have shown an increasing loss of faith in the institutions which hold the budgets for English health and social care: NHS England, local authorities, and to some extent the Department of Health and Social Care.
The commanding heights of the British state resent the failure of health and care to deliver commitments on savings, reform, waiting times and financial control – often without much introspection on what this says about the realism of the commitments. On their side, health and care leaders often lobby for cash by appealing to special narratives and the priorities of politicians to show that their need for more is different this time.
The new Secretary of State Victoria Atkins is the latest in a long line of former Treasury ministers sent to oversee health and care, perhaps in the hope of bringing it into line. She will be crossing the aisle – perhaps hoping to bridge it – in a division which goes beyond inevitable tensions between the parts of government which deliver and the parts which have to foot the bill.
We will shortly publish a new Finances Tracker with a raft of facts and analysis to monitor the actual financial decisions and results taken now and over the past several years. But the dynamics behind the scenes also contribute to five clear patterns which have a direct impact on the running of services – usually for the worse.
1. Promising and planning
For around a decade, repeated overspends, cuts to long-term budgets and worsening waiting times have supplied evidence that the NHS does not have enough money to deliver its remit with the significant but not dramatic increases in productivity it has been able to achieve.
In response, NHS plans have been drawn up in large part as bid documents to the Treasury for more money. This creates incentives to overestimate savings, and focus on priorities which carry easily quantifiable costs. The recent long-term workforce plan, an admirable attempt to work on a longer time horizon, may be an example. It was highly specific about training numbers, which carry a clear funding requirement, but less so about retaining existing staff or reforming the pay system, which are more difficult to cost.
Several initiatives during the last decade presented aspirations for savings and activity reduction which proved far beyond what was feasible. Examples include the 2014 Five Year Forward View, suggesting new models of care would raise efficiency increases to 2-3% a year. The Better Care Fund caused the Public Accounts Committee to note in 2017 that “planned savings of over £500 million were not achieved, and emergency admissions and delayed transfers of care alone ended up costing around £460 million more than planned”. This forms part of a pattern across the UK of initiatives for integration and joined-up care assuming and requiring cash savings and reductions in hospital activity. But there is limited evidence for these being delivered from this kind of initiative: achieving savings on the scale often stated would have been a remarkable breakthrough, not a reasonable baseline requirement.
At the level of more minor initiatives spanning a year or a few months, there are far too many examples to list of optimistic commitments in return for chunks of spending.
The failure to deliver inevitably generates further mistrust, and for longer-term commitments it resulted in unrealistic budgeting as they were factored into the national settlements which accompanied, for example, the Forward View. The 2019 Long Term Plan shows a conscious effort to keep projected productivity improvements realistic. However, it assumed that an inherited £2 billion black hole could be suddenly dealt with in the first year, which proved impossible. Its commitments to cash-releasing savings and to reducing the demand for care through integration still showed a very high level of ambition.
2. Ministerial direction
Often, only politicians can break the logjam to spend more. Proposals designed by or alongside them tend to reflect their lack of faith in the NHS and local authorities to deliver. This typically means relatively small pots of money with key political goals attached.
Adult social care suffers particularly from this. In the last three years it has had three special pots of funding to improve hospital discharge, three pots for workforce retention, recruitment and reform, a round of funding to improve capacity and sustainability, an earlier round to assess what fair fees would be, and several smaller pots for priorities such as technological improvement. Each comes with separate allocation, planning, monitoring and delivery standards. There are multiple examples from the NHS and public health as well.
Every one of these initiatives has perfectly laudable goals, but achieving them requires a generally healthy system. Pouring extra money into parts of the system but not others risks a mismatch in capacity which creates bottlenecks. The array of reporting and achievement requirements risk taking up managerial time and encouraging poor joint working through enforced focus on narrower goals. Bigger and more strategic changes which could achieve many of these goals – like managing the market for social care to improve stability and improvement across a whole local area – cannot be done with limited funds for each separate problem and when efforts must be diluted into many separate processes.
An almost invisible cost is generated by the process behind both small funding pots and large plans linked to billions. Highly capable DHSC and NHSE analysts and economists spend a huge amount of their time attempting to prove that pockets of additional spending will save money, or cheaply deliver key political goals – rather than working out whether initiatives and treatments are actually successful.
3. Front line first
The constant need of the NHS and social care for more money immediately, the reluctance of the Treasury to be seen giving more funding to a Department lacking “grip”, and the reluctance of wider government to trust NHS promises for the future encourage short-term reprioritisation of the front line of care over everything that supports it.
Topping up the NHS England budget part way through the year when it proved over-optimistic happened throughout the peak pandemic years, but also this year, last year, in 2018/19 by raiding other health budgets, and in 2017/18 and several years before that by raiding the capital budget. Reflecting this the NHS, in particular its hospital sector, routinely overspends in the assumption of a bailout.
The most notable and damaging example of this were the cuts to capital spending on buildings, scanners and IT equipment, as this was transferred to fill provider overspends. Unfortunately, it seems these are far from a thing of the past.
As Sally Gainsbury has chronicled, even shifts inside the NHS often mean cutting budgets for long-term improvement, such as the “Sustainability and Transformation Fund” intended to achieve changes in the Five Year Forward View. Top ups for winter spending to accompany annual plans are regularly expected, yet the long-term assets of staff, buildings and ways of working cannot just be turned on and off for four months a year.
At times governments, perhaps reflecting the public popularity of clinicians over administrators, have tried to redistribute the balance of staffing pay within the NHS away from managers – without necessarily a clear idea of what proportion of managers would be right, or why.
In social care, giving out funds through one-off short-term special funds will give less reassurance to investors in the sector that there is a long-term, predictable income stream to reward them for expanding the workforce, improving IT or investing in buildings. Even general funding for local authorities is usually specified through funding settlements at a single-year level. The recent NAO report on social care reform “noted concerns that short-term funding does not support value-for-money decision-making. It can lead to a lack of time to review savings options to make good rather than quick decisions.” The short time horizon does not encourage councils to attempt goals which could only show results in the longer term, like preventing deterioration and hospital admissions through improving people’s wellbeing.
The Institute for Government has recently noted that short-termism is an almost universal problem in British public services. It is regrettable that even the NHS, objectively the big budget which has seen the greatest increases, and social care where long-term reform has been pledged for years, have been no exceptions.
4. Too much too late
Chronic delay in policy and operational decisions is widely rooted in the public sector. But there are probable examples where the oppositional relationship between health and social care and the rest of government have contributed. Several recent NHS plans, strategies and announcements have reportedly been held up for months pending negotiation between the Treasury, 10 Downing Street and the DHSC or NHS England, including the recent workforce plan, elective recovery plan, and integration white paper. The New Hospitals Programme also saw prolonged delays for approval, funding confirmation and alteration by the Treasury, the Major Projects Review Group and the Infrastructure and Projects Authority. While these may have been necessary in view of real specific problems, this further indicates the difficulty the health sector has in building compelling cases for wider government.
5. Enough already
Lastly, a belief that the NHS is far less productive than it could be on the one side, and optimistic promises of improvement on the other, shield politicians, administrators and the public from confronting hard choices.
Health spending has climbed as a proportion of national income in essentially all countries similar to the UK, regardless of their funding models. Ireland is an apparent exception – but this is an illusion caused by an explosion in its GDP after tax changes attracted corporate multinational headquarters. Its actual spending per person has risen by almost 50% since 2010.
There are three plausible hypotheses for this. New technologies and higher standards create constant upward pressure for more costly interventions. The ageing and growing population increases need, as does a trend for more people to have multiple conditions at each age. The NHS needs to compete globally for both staff and supplies and cannot simply pay less. Each of these will remain the case.
The implied dilemma between rationing or spending more is rarely discussed by UK politicians. Countries which control spending to a low share of GDP, like Singapore, often do so through loading large costs onto patients to deter the use of care. Even so, at a lower proportion of GDP, Singapore’s health minister recently noted that health care spending is due to triple in the coming decade.
It is possible that a distant future where artificial intelligence actually means we could safely reduce staffing, or unprecedented improvements in population health, could change this global trend. What is remarkable, though, is that successive government and opposition health secretaries have confidently assumed that it will be ended soon by one more wave of reform involving neither of these, and no moves to deter people from seeking care either.
It is difficult to blame politicians for this belief when it is consistent with what they hear from senior public servants in the Treasury and at times NHS leadership. If we can reach a world where the rest of government understands that health and social care costs rise relentlessly by default and explosions in productivity are very rare, and where the NHS and DHSC do not sugarcoat the limitations and hard choices they face, health and social care policy in England could be saner and more stable.