While there are a number of finance and funding challenges facing the whole provider sector, there are significant, specific challenges facing mental health provision and NHS mental health trusts that need to be addressed. Trust leaders have raised the following factors as contributing to financial pressures for the sector this year:
- growing demand for inpatient care, which is leading to both high use of out of area placements, particularly where there is no risk share agreement in place with CCGs, and delayed transfers of care, often from inpatient to community settings or supported housing
- growing demand is also leading to a need for trusts to recruit more staff, and trusts are facing the increasing costs of staff recruitment and retention
- covering the costs of year three of the agenda for change pay uplift, the uplift is being funded through the tariff and as such is based on provider sector averages which assume a lower pay cost base for mental health trusts
- the mental health investment standard that local commissioners must honour is seen in some cases as a maximum limit based on affordability, rather than a minimum based on need
- combined mental health and community trusts continue to be affected by cash reductions in local authority public health contracts which has meant the decommissioning of some services, e.g. substance misuse services,
- the frequency of re-tendering for services in the mental health and community sectors, which means there is less financial security over the longer term.
Many of these challenges are rooted in the fact that the mental health sector has suffered a historical, structural disadvantage compared to physical health provision.
One of the key reasons for the sector's disadvantage is the broader societal and historical impact of the stigma surrounding mental illness and mental health. Welcome strides have been made to challenge this stigma and to raise awareness of the need to improve care. However, there is still a considerable level of stigma and a lack of equity of treatment associated with mental health that is reflected in how we view, support and deliver services. As a healthcare system, while our aspirations are growing – supported by politicians and senior healthcare leaders, we are still operating in the context of a 'care deficit' meaning that we accept that not all those that need help and treatment will seek or be able to access support. It also means the provision of mental health services is not prioritised across the whole of the NHS. Alongside this, how mental health services are commissioned, funded and paid for translates into the mental health sector’s historical and structural disadvantage.
This briefing explores these challenges in more detail and sets out our view on what needs to change in order for the sector to deliver on the NHS' ambitions for supporting people's mental health and wellbeing over the next decade.
Historic lack of investment and prioritisation
While all trusts and the wider health and care system are operating under severe financial constraints, there has been a particular lack of investment and prioritisation of funding for mental health services over the years. This is an issue that persists despite a growing political focus on mental health care and a welcome number of funding commitments made over recent years to address historic levels of underfunding and improve the quality and accessibility of mental health services in England.
Parity of esteem and The five year forward view for mental health
In 2013/14 NHS England developed a programme with a set of commitments to promote parity of esteem between mental and physical health. In 2016, the government committed to increasing investment in mental health services by at least £1bn (in real terms) by 2021 to deliver the The five year forward view for mental health.
A number of other mental health funding commitments were made – albeit these were mainly focused on specific programmes as opposed to investment in broad provision – between 2015 and 2017. In January 2015, £1.25bn was pledged to help children and young people, and expectant or new mothers, with mental health problems. In November 2015, £600m was announced to help significantly more people access talking therapies by 2020. In January 2017, the government committed an extra £15m for community mental health care.
Data for 2016/17 showed the situation for mental health trusts had improved, with 84% of trusts receiving an increase in funding in cash terms. Yet, this was still below the proportion of acute trusts (almost 95%) receiving an increase in income in cash terms.
However, despite the commitment to parity of esteem, analysis by The King’s Fund in 2018 found that almost 50% of mental health trusts received a reduction in their budgets in cash terms in 2014/15 - 2015/16, while, just under 75% of acute trusts received increases in their income over the same period. Data for 2016/17 showed the situation for mental health trusts had improved, with 84% of trusts receiving an increase in funding in cash terms. Yet, this was still below the proportion of acute trusts (almost 95%) receiving an increase in income in cash terms.
According to our analysis of latest NHS figures, 79% of mental health trusts received an increase in turnover in cash terms in 2017/18 - 2018/19, in comparison to 84% of acute trusts. We have also found mental health trusts' turnover only increased by 2.1%, whereas acute trusts’ turnover increased by 3.4% over the same period. This is significant progress but there is still not the required equity in investment that service users, their carers and families deserve.
The long term plan
The NHS long term plan significantly builds on previous mental health funding commitments. The majority of the extra funding is allocated to community based mental health services, with the largest amount going towards adult severe mental illness community care, which is welcome given a previous lack of focus on core community services.
However, while the additional money in the long term plan and areas it is being targeted on are welcome, funding for the sector over the next five years will only rise as a share of the NHS budget by 0.5 percentage points – from 7.8% in 2018/19 to 8.3% in 2023/24. We have said this falls far short of the amount needed to close the care deficit in mental health and raises questions over how fast and how many of the numerous ambitions for mental health care in the long term plan can realistically be delivered.
However, whilst the additional money in the long term plan and areas it is being targeted on are welcome, funding for the sector over the next five years will only rise as a share of the NHS budget by 0.5 percentage points.
Crucially, while the NHS mental health implementation plan provides welcome further detail on when and where the extra £2.3bn funding will be allocated, there remains a lack of detail on baseline spends for a number of mental health service areas which makes accurate evaluation of how significant funding allocations are difficult. The framework also lacks detail on the future budget and number of beds for specialised mental health services.
More broadly, evaluating how much funding mental health should be getting – be it in cash terms or as a proportion of acute sector spend – and how far short current proposals fall is a considerable challenge given fundamental questions concerning what a 21st century population should be able to expect from mental health services – for example in terms of waiting times, eligibility for care and what kind of treatment and support should be available – and what such services would cost to deliver remain unanswered.
Diversion of funding
Funding pledged for mental health prior to the funding committed in the long term plan has generally not been ring-fenced, which means that it could have been diverted for purposes other than mental health. This links to wider issues around governance and transparency explored in a subsequent section of this briefing.
The British Medical Association has argued the significant financial pressures in the NHS increases the likelihood of funding being diverted to balance finances, and the tangible improvements made to the provision of perinatal mental health services in England can be largely explained by the funding commitments to these services up until 2020/21 being ring-fenced. The King's Fund has also suggested previously that mental health funding growth may have been restricted as commissioners prioritised support for struggling acute providers.
Some mental health trust leaders have raised concerns that the requirement for ICS and STPs to reach financial balance can mean any extra funding mental health trusts do see could end up being used to offset financial deficits in other system partners.
Some mental health trust leaders have raised concerns that the requirement for STPs and ICSs to reach financial balance can mean any extra funding mental health trusts do see could end up being used to offset financial deficits in other system partners. This chimes more generally with broader concerns trust leaders have raised, anecdotally, that some systems are prioritising funding for other areas and seeing the MHIS as discretionary. It is possible that an increase in funding, without a commensurate expansion in provision, would lead to larger surpluses among mental health trusts. While this would result in a balanced position at a system level, it would not bring the improvement in access that the MHIS exists to deliver.
The mental health care deficit
The sector's slow funding growth and low levels of investment historically has had a significant impact on access to mental health services and the extent of variation in mental health care across the country. Our survey of frontline mental health trust leaders highlighted that there is a substantial care deficit in mental health. There is significant unmet need for a number of mental health conditions – particularly community services for adults and children, gender identity services and crisis home treatment teams.
Our survey also found:
- 95% of mental heath trust leaders disagreed that overall investment in mental health is adequate to meet current and future demand
- 65% did not think that their trust has the freedom to invest in the areas they identified as a priority
- 60% disagreed with the statement "my trust is able to balance meeting the requirements of national policy priorities while providing core mental health services" while only 15% agreed
- 37% of trust leaders said they had to change or close services as a result of financial pressures.
The Institute for Fiscal Studies and The Health Foundation estimated that mental health spend would need to more than double to make serious inroads into unmet need – that is increasing the proportion of people with mental health care needs being met from 39% to 70%.
No more so is this underlined than by the scale of the ambitions for meeting the significant levels of unmet need in children and young people’s mental health care.
There is a wider point to be made about the stark difference in the level of aspirations around meeting the needs of those with mental, as opposed to physical, health conditions. No more so is this underlined than by the scale of the ambitions for meeting the significant levels of unmet need in children and young people’s mental health care. The aim since 2015 has been to increase access only to 35% of children and young people with a diagnosable condition by 2020-21. Similarly, plans to introduce new mental health support in schools are aiming to cover only up to a quarter of the country by 2022-23. As the Royal College of Psychiatrists has highlighted, it is the government's own expectation that 15% of children will still not be able to access one of these teams a decade after they have been launched.
The impact of cuts to social care, public health and wider services
The impact of funding constraints beyond the NHS is also important to highlight. We have already said that severe funding constraints and uncertainty for key services outside of the core NHS budget such as social care and public health, risk exacerbating the pressures on the sector, by driving further increases in demand for secondary care which could be better met through appropriate investment in a preventative approach, in primary care, social care and in additional capacity within the community.
The impact of these wider cuts is particularly significant for the mental health sector. In our 2019 report, Mental health services: addressing the care deficit, 92% of mental health trusts told us that changes to universal credit and benefits are increasing demand for services, as are loneliness, homelessness and wider deprivation.
Commissioning is another important reason for the mental health sector's historical, structural disadvantage compared to other sectors. Following the Health and social care act 2012, the commissioning of mental health care by local and national commissioners has been fractured, impacting on the efficiency of service delivery and continuity of care. Compounding this issue is the number of wider services supporting mental health service users, such as substance misuse and public health more generally, now commissioned by local authorities. This has created a much more complicated commissioning landscape, leading on occasions to delays and inefficiencies, and has also meant that investment in those services has decreased as financial pressures on local authorities have risen.
Our survey of mental health trust leaders put the commissioning challenges the sector faces into sharp focus.
Our survey of mental health trust leaders put the commissioning challenges the sector faces into sharp focus. Over half of respondents stated they had changed or closed services as a result of commissioning decisions. Commissioning arrangements were also cited as a key reason why trusts are struggling to meet demand. The frequent tendering of services is a further key issue. Mental health trusts have told us that reducing tendering activity would be one of the most effective ways of alleviating pressures on services.
Welcome work is underway to bring together fragmented commissioning arrangements and support more integrated working through new models of care for mental health, and a number of leaders have told us that the consolidation of the CCG landscape and work at a system level should help to improve the effectiveness of commissioning in time. However, as this work progresses further it is vital that secondary providers of mental health services are adequately funded and resourced to manage these new care budgets effectively.
Governance and transparency
One of NHS England's key commitments to address historic underinvestment in mental health provision and promote parity of esteem has been the requirement since 2013/14 that CCGs increase their mental health spending in real terms, by at least the same proportion as their overall budget increase. This commitment was introduced as the MHIS in the NHS operational planning and contracting guidance 2016/17.
The 2018/19 financial year was the first in which NHS England's planning guidance was prescriptive that all CCGs had to meet the standard. NHS England's planning guidance for 2019/20 included welcome further steps to tighten rules for CCG spending on mental health services and implement stricter controls on those failing to achieve the MHIS. Welcome steps have also been taken to increase transparency in the way mental funding allocated from CCGs to mental health trusts is accounted for.
However, while total local CCG spend on mental health services has increased over recent years and all CCGs were recorded (for the first time) to be meeting the MHIS for 2018/19, there continue to be concerns raised that funding for the mental health sector is not always making its way to the frontline services that need it most. In our survey of mental health trust leaders, 60% disagreed with the statement 'the mental health investment standard is being appropriately applied for my trust', while only 15% agreed.
In our survey of mental health trust leaders, 60% disagreed with the statement ‘the mental health investment standard is being appropriately applied for my trust’, while only 15% agreed.
Furthermore, while the proportion of CCG funding being spent on mental health services does not take into account the management of mental health problems by GPs, it is significant that CCG funding only equates to 13.9% of their total budgets despite mental health being the single largest burden of disease in the UK (28%). It is also difficult to get a true picture of how much the recurrent mental health budget has grown by given the total spending figures for mental health include learning disabilities and dementia, as well as one-off transformation funding which are not included in calculations on whether a CCG hits the standard.
A large cause for concern is the significant variation in the proportion of CCGs' overall allocations in 2018/19 going on mental health, learning disabilities and dementia, and the fact that a number of areas have seen a decrease in spend on children and young people's mental health in the last couple of years.
While it is difficult to draw any firm conclusions on CCG spend without having an idea of the demand for services in each area, the above highlights some of the shortcomings of the MHIS in its current form. For example, CCGs are required to increase investment in mental health services in line with their overall increase in allocation each year, however what an optimum level of spend is has not been identified, CCGs under-spending the most are not required to improve faster nor is there an explicit requirement for CCG spending on mental health to be good value.
Payment systems and contracting
Linked to the topic of transparency and accountability for how funding is spent are the systems used to pay providers for mental health services.
There is a clear structural inconsistency between mental and physical health care due to how services are paid for and contracted. Unlike in the acute sector, where there is a developed and sophisticated payment system that accounts for activity (payment by results), most mental health trusts are paid to deliver the majority of their services on some form of block contract.
Block contracts have been criticised for not enabling proper transparency and accountability for how the funding is spent.
Block contracts have been criticised for not enabling proper transparency and accountability for how the funding is spent. They have also been criticised for masking some of the underfunding in mental health, due to being inflexible and, once agreed, not reflecting changes in demand in year. The sustained use of block contracts has meant providers have not been resourced sufficiently for escalating demand nor has it enabled wider service investment.
NHS England and Improvement recognise that block contracts do not support the improvements in access to mental health services they want to see, and have committed to phasing them out. A 'blended payment' system was proposed as the default for adult mental health services for the 2019/20 national tariff. Under this model, trusts would be funded for an agreed level of activity, and would share the financial risk with commissioners when demand levels vary from the forecast level. In the longer term, NHS England and Improvement are considering changing the design of mental health blended payments to focus more on outcomes-based elements that support long term plan objectives, rather than activity-based variable elements.
Mental health trust leaders have told us moving away from block contracts, towards an outcomes based commissioning framework, would have a positive impact and most effectively alleviate pressures on services within the next two years.
The 2019/20 tariff proposals were encouraging and the new approach has the potential to support the much-needed expansion and enhancement of mental health services. Mental health trust leaders have told us moving away from block contracts, towards an outcomes based commissioning framework, would have a positive impact and most effectively alleviate pressures on services within the next two years.
However, while many mental health trusts support the principles of the blended payment model, there is concern that the data underpinning existing block contracts is not sophisticated enough to develop into blended payment contracts. Concern has also been raised about an aversion amongst some commissioners to introducing new financial risk into mental health contracts, which may be discouraging moves from block contracts to blended payments. It is also likely that a blended system will not be any more appealing to providers than a block contract if the amount of money available does not increase, and would only add bureaucracy without solving the fundamental issue of underfunding.
NHS Providers voiced concern at the time the 2019/20 tariff consultation was first published about the lack of prior engagement on the detail of the proposals, and that the timescales for implementing such significant changes to mental health contracts were too short. Setting a baseline for activity in mental health services will be difficult, potentially time consuming and is likely to require a significant resource commitment, which needs to be recognised. We are also concerned that impact of blended payments for mental health has not been publicly evaluated and yet the approach is being extended to other areas of care.
Restricted capital funding
Mental health trusts also need capital investment. Restricted capital funding is affecting all sectors of the NHS, however capital investment is particularly needed to improve patient safety in mental health trusts.
There is a need to remove fixed ligature points, and mental health trusts would like to invest in the removal of the 350 dormitory wards still used across NHS England. There are no robust estimates on what this may cost. The independent review of the mental health act 2018, called for major capital investment in the NHS mental health estate, while Care Quality Commission's State of care in mental health services 2014-17 report found that many mental health wards throughout the country are "unsafe and provide poor quality care" in "old and unsuitable buildings".
Yet, NHS mental health providers get less capital funding than might be expected given the sector's proportion of turnover across the whole of the NHS provider sector. Furthermore, only three mental health trusts (out of 20 trusts) were allocated funding in the first wave – and none were allocated funding in the second wave – of capital investment for trusts announced by the government in September 2019.
The under prioritisation of investment in the mental health estate is having a real impact on patients and that the risks to patient safety from infrastructure failures in mental health trusts are severe:
- the number of reported patient safety incidents caused by infrastructure in 2018/19 was 19,088 compared to 17,693 in 2017/18
- the number of infrastructure incidents in mental health trusts has increased by 28% from 2015/16 to 2018/19, compared to a 16% increase for incidents in all trusts
- there were seven never events reported in mental health trusts in 2018 as a result of a shower/curtain rail failing to collapse and one as a result from a fall from a window.
Several mental health trust leaders have expressed their concerns that lack of capital investment places their patients at increased risk. Trust leaders highlight in particular:
- a trust's physical environment affects the rehabilitation and recovery of people at an incredibly vulnerable and difficult point in their lives
- people typically stay for longer compared to a typical general hospital admission, so having high quality therapeutic environments is key to recovery
- recognised best practice for mental health care has progressed significantly in recent years, and trusts need capital funding to invest to ensure their built environments keep pace
- without additional investment, it is very difficult for trusts to provide the right facilities without making big savings elsewhere
- greater capital investment in services would not only make a huge difference to patients’ recovery, but also improve the morale of staff.
While the government's latest capital announcements mark a real step forwards, the 10% uplift on the NHS capital budget they provide still falls short of what is required to clear the maintenance backlog and invest for the future. We have calculated that the current capital budget for NHS providers of approximately £5bn a year needs to double over the coming years to address the maintenance backlog and meet patient need. This would match current capital spend in comparable countries, ensure safe care and help create the right environment for staff.
We have calculated that the current capital budget for NHS providers of approximately £5bn a year needs to double over the coming years to address the maintenance backlog and meet patient need.
We are keen to understand the annual allocations of the additional £3bn investment in the period 2021-25 given the NHS does not have a capital budget set beyond 2020/21, and have stressed the importance that the extra funding translates into a £3bn increase to the current capital departmental expenditure limit baseline over that time. Further details are also needed on the spread of the schemes to be allocated seed funding, across acute, mental health, community and ambulance providers.