The Nuffield Trust responds to the 2013 Spending Round

Responding to the 2013 Spending Review, the Nuffield Trust warns that the prospects for NHS spending are set to worsen from 2015/16.

Press release

Published: 26/06/2013

The independent health care think tank has warned that notwithstanding the Chancellor’s announcement today that NHS spending remains relatively protected into the financial year 2015/16, the financial outlook for the health service is set to worsen in the longer term if its leaders and staff fail to deliver much needed change.

Commenting, Nuffield Trust Chief Economist Anita Charlesworthsaid:

“Next month’s projections from the Office of Budget Responsibility are likely to conclude that the pressure on services such as health, pensions and long-term care will continue to rise faster than tax receipts, even after the economy has recovered.

To date the NHS has delivered its efficiency targets largely through strong central measures such as cutting administrative costs and holding down pay. These are short term fixesAnita Charlesworth, Chief Economist, Nuffield Trust

“Against this background the Government faces choices at the next spending review in 2015 that are even tougher than those at present. By that point departmental spending on non-ring fenced areas such as policing and local government would have fallen by a third.

“In the absence of major tax rises or a relaxation of the Government’s borrowing targets it is difficult to see how the NHS could continue to be protected in such circumstances.

“To date the NHS has delivered its efficiency targets largely through strong central measures such as cutting administrative costs and holding down pay. These are short term fixes. The pace of change needs to increase in the NHS, with a greater focus on longer term transformation.

“Without such a shift we are storing up financial risk and NHS managers will find it harder and harder to match rising demand to a stagnant budget.

“Within the overall allocation for health, the administration budget is set for further cuts of 10 per cent in real terms. It is absolutely right that the front line should take priority when resources are scarce. However, with Clinical Commissioning Groups (CCGs) and the Care Quality Commission playing a vital role in ensuring quality and security of services, ministers must ensure that they have enough funding to do their jobs well.

“Many CCGs are already expressing concern about the financial pressure they are under given their current allocations. We need further clarification on where these cuts will fall, and assurance that the Government has fully considered any potential impact on the commissioning and oversight of care.

“The decision to allocate £3.8 billion to fund joint work across health and social care has the potential to help enable new ways of working which could meet the needs of patients better while improving efficiency. If it is to achieve this, new funding and pooled budgets must be supported by cultural and leadership commitment to integrated working at a local level, and by governance structures which help create common goals across social care and the NHS.

“It is critical that these funds are carefully targeted towards innovative service models, with decisions backed by careful evaluations of what works and what doesn’t. As demonstrated in our latest report, released today, past studies of integrated and community care initiatives have often failed to provide evidence for cost savings in the short term.

The Government must ensure that they take into account broader benefits and the long-term impact of new programmes of joint work.”

Notes to editors

  • The Nuffield Trust commissioned – Institute for Fiscal Studies report: NHS and social care funding: the outlook to 2021/22 (4 July 2012), maps the longer term financial challenge facing the health service. It examines what can be expected once the unprecedented four-year period of broadly flat real-terms NHS spending ends in 2014/15, and it also assesses the likely outlook for social care spending;
  • The subsequent report: A decade of austerity? The funding pressures facing the NHS from 2010/11 to 2021/22, (3 December 2012) examines the future pressures on NHS services in England. The findings were released alongside new Ipsos MORI polling data – commissioned by the Nuffield Trust – which shows that the NHS is the number one area the public want to be protected from cuts;
  • The Nuffield Trust’s latest report, Evaluating integrated and community-based care: how do we know what works?summarises evaluations of over 30 community-based interventions designed to reduce emergency hospital admissions. It shows that most have not demonstrated a reduction in urgent admissions, and makes recommendations for better evaluation and leadership in integrated care.