A pragmatic approach required for NHS funding

Chris Hopson profile picture

14 February 2021

Chris Hopson
Chief Executive
NHS Providers

The NHS is still dealing with pressures never experienced before in its 72 year history. But as we saw with the publication this week of the government's White Paper, thoughts are turning to a future health service, more integrated with local partners and better placed to deal with the demands of an ageing population with more complex health conditions. As part of this, attention will need to return to NHS finances. It's a difficult picture.

Before the pandemic, in June 2018, the government committed to increase core NHS revenue funding by an average 3.4% a year to 2023/4 in real terms.

This welcome increase followed the deepest and longest financial squeeze in NHS history.

Chris Hopson    Chief Executive

This welcome increase followed the deepest and longest financial squeeze in NHS history – nine years of 1.4% funding growth between 2010 and 2019. But the June 2018 funding increase was never a bonanza. It actually returned NHS funding to less than the 4% long term real terms average rate of increase between its creation in 1948 and 2010.

The NHS Long Term Plan, launched in January 2019, set out a range of different outcomes for the extra investment and that plan must remain at the heart of the contract between the NHS and the taxpayers funding that increase.

However, two crucial elements were missing when that agreement was made: multi year capital and training budgets. Certainty over capital and workforce funding is now even more pressing given that this government was elected in December 2019 on a manifesto that promised 40 new hospitals by 2030 and 50,000 extra nurses and 50 million extra GP appointments a year by 2025. Given the length of building and training pipelines involved, none of these commitments can be met without clear multi year settlements.

COVID-19 has now further complicated this picture by adding a huge raft of extra costs, both short and longer term. There is a backlog of elective surgery cases that will take several years to clear. Demand for mental health services has increased rapidly and there's a whole new set of patients with long COVID whose care needs to be funded.

Underlying this is a longer term requirement to configure the NHS to cope with COVID-19 long term.

Chris Hopson    Chief Executive

Underlying this is a longer term requirement to configure the NHS to cope with COVID-19 long term. An annual COVID-19 vaccination campaign that will require a much more sustainable workforce model; a permanent test, trace and isolate service that can combat virus mutations; and extra capacity investment to counteract the impact of tighter infection controls. The NHS also needs to build in more resilience so that it can cope with surges in demand without having to ask our frontline staff to do the impossible day after day. And this, of course, is all before social care reform that the pandemic has shown we simply cannot delay any longer.

How should the government respond? Prioritisation will be key. And the extra one off £1.5bn government has already committed for 2021/22 to start to tackle elective waiting lists and extra mental health demand is a helpful start.

The NHS will need to play its part. Resuming its successful pursuit of efficiencies as soon as COVID-19 allows and making the NHS pound stretch further as we move towards the greater collaboration between health and care envisaged in this week's White Paper. But there is another major remedy that would help – a pragmatic approach to the core NHS revenue budget between now and 2023/24, the last year covered by the June 2018 funding commitment.

NHS spending this year has increased significantly to cope with extra COVID-19 costs.

Chris Hopson    Chief Executive

NHS spending this year has increased significantly to cope with extra COVID-19 costs – the outturn will be much closer to what the service was due to spend in 2023/24 than the original 2021/22 budget. It makes little sense to allow the core NHS revenue budget to fall back down again to lower levels, only to build it back up again reactively to the levels we have already committed to spend in 2023/24. Maintaining higher levels of extra spending for the next three years would not bake in a long term recurrent level of funding increase, as the NHS budget in 2023/24 would remain the same as planned.

There is a lot of work needed to fill in the details of this top line approach. But it would provide a sensible way of enabling the NHS to provide the care it needs as we come out of the worst of COVID-19 and learn to live with it longer term. The NHS and its staff have done amazing things over the last year. The service deserves, and requires, a pragmatic approach to its future funding model to carry on delivering the care our nation needs.

This article was first published by the Financial Times

About the author

Chris Hopson profile picture

Chris Hopson
Chief Executive

Chris Hopson is the chief executive of NHS Providers. He joined in September 2012 after a career in politics, commercial television and the civil service. Read more

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