Party conference commitments on NHS spending: the unanswered questions

Andy McKeon asks, can politicians really deliver on their NHS spending promises?

Blog post

Published: 15/10/2015

I am writing this from my hospital isolation room having just had a stem cell transplant that will I hope cure my dysfunctional bone marrow. The transplant and the care that goes with it is a tremendous fusion of compassion, research, pharmaceutical development, attention to detail, dedicated caring professionalism from the unit director through to the receptionists, significant voluntary sector input largely from the Anthony Nolan Trust but also in funding of hospital facilities, and international cooperation.

There is no suitable donor for me on the UK registry. But the much larger American and German registries have yielded several potential ones and a young American donated some of his stem cells on the Monday which were brought over by a volunteer and given to me on the Wednesday. I know I am fortunate to be in this position: others are not so lucky.

But great care in this instance also comes with a large bill. I am one of the people responsible for pushing up NHS costs. NHS England will pay my London centre about £100,000 to acquire the cells and for the 100 days of immediate care that surround the transplant. Costs after that – and there will be some – are additional.

I have always taken a keen interest in NHS funding throughout my career but now have a very strong personal interest as well. So what am I to make of the party conference commitments on NHS spending?

The Conservatives have committed to ‘protect the NHS budget and invest more’ – non-specific in terms of amounts but might reasonably be taken to be more of the same i.e. funding to run a little above general inflation as it has for this Parliament. The Liberal Democrats have pledged £1 billion more on top of inflation for the first two full years of the next Parliament. Labour have committed to an extra £2.5 billion above inflation, but this would not come on stream until later in the Parliament.

All apply only to the English NHS. Scotland, Northern Ireland and Wales would make their own decisions within the total amounts they will receive for all public spending under the (renegotiated?) Barnett formula. There is an interesting twist for Labour here. They say they will fund £1.5 of the £2.5 billion through a ‘mansion tax’ on homes valued over £2million. This will be a largely London tax. But under the Barnett formula another £225 million or so will need to be raised for the other 3 countries. Small change in terms of total public spending perhaps, but given how the extra is going to be funded in England, Scotland at least might be asked or required to use their own tax raising powers for the first time to fund their share?

I draw five conclusions about these commitments:

  • First, in practice, the amounts involved are likely to be very similar – not surprising as the financial room for manoeuvre is very tight. Labour’s roughly 2.5% real terms growth over the Parliament might well be very similar to ‘protecting the NHS budget and investing more’ if the past is anything to go by. The Liberal Democrats’ £1 billion increase after two years would look rather like Labour’s £2.5 billion if a similar trajectory of £0.5 billion more each year was continued for the rest of the Parliament. And it is hard to believe that the third party would block such growth in coalition with either side, given their commitments.
  • Second, they don’t address the looming financial crisis in the acute sector which has grown bigger and more obvious since hospital finance regulators Monitor and the TDA published their quarterly figures. It will only get worse. Commitments for increased funding for access to GPs (Conservative) and mental health (Liberal Democrat) are welcome. But I can’t help thinking it will be the state of acute hospitals that will grip the public.
  • Third, only the stingiest pay awards will be possible. The next five years for pay are going to look like the last five. We can already see the problems this is causing as the government overturns Review Body recommendations as unaffordable when they were hardly generous to begin with. Pay might also be one factor in the rise in use of expensive agency staff. Continuation of the existing approach to pay looks less and less fair or sustainable, especially if the economy gathers pace.
  • Fourth, little or nothing has been said about social care. De facto, the budgets for adult social services and the NHS have already been merged with the former increasingly dependent on NHS funds to cushion local authority cuts. The trouble from the NHS’ point of view is that social care budgets are not ring-fenced – they have no financial bottom. The NHS ring-fence looks less and less plausible unless both health and social care budgets are formally brought together and ring-fenced.

2016 will also see the implementation of the Care Act and the cap on individual social care spending. The NHS is already funding the preparatory assessment costs for local authorities. It may well have to fund the full cost of implementation – another £1 billion. This would not be a good use of NHS funds in my view. Most of what is spent under the Act will not actually go on buying new care for patients: it simply switches what has been private spending on to the public sector.

  • Finally, although well intentioned and welcome, the sums being put forward are simply not enough to meet the health and care funding crisis, improve accessibility and quality to meet reasonable pressures and demands and pay the staff enough to avoid recruitment and industrial relations problems.

The treatment I am receiving now is testament to the strength of some underlying trends driving pressure on the health service: new technologies, new treatments becoming more widely available, and a workforce with skills in international demand. They are trends we would not want to reverse even if we could.

The signs of recent deterioration as the system struggles to cope are clear. ‘More of the same’ will only lead to further worsening.

What and how we fund the NHS is going to be the single largest and most difficult domestic policy issue in the coming Parliament.

Suggested citation

McKeon A (2014) 'Party conference commitments on NHS spending: the unanswered questions' Nuffield Trust comment, 15 October 2014.