In September 2021, the government committed an extra £5.4bn to the NHS over the next six months to support its ongoing response to COVID-19. Ministers also made headlines by announcing a 'record £36bn investment to reform the NHS and social care'. This new money is welcome, especially when public finances are so tight, but in reality the NHS continues to be under significant financial pressure.
Funding for the second half of 2021/22 (H2)
The NHS will receive an extra £5.4bn over the next six months to support its ongoing response to COVID-19. This can be broken down into:
- £2.8bn for COVID-19 costs, including infection control measures
- £600m for day-to-day costs
- £478m for enhanced hospital discharge
- £1.5bn for elective recovery, including £500m capital funding.
NHS Providers wrote to the government and NHS England and NHS Improvement (NHSE/I) in July 2021, calling for H2 funding to be confirmed as soon as possible, and this announcement gives the NHS the clarity it urgently needed. We also campaigned alongside the NHS Confederation and Community Network to make the case for discharge to assess funding to be made permanent. The additional resource allocated to this initiative until the end of 2021/22 is therefore particularly welcome.
NHS England and NHS Improvement recently published priorities and operational planning guidance for October 2021 to March 2022. Systems had until 14 October 2021 to bid for a £700m targeted investment fund (including the additional £500m capital funding), which is aimed at supporting elective recovery. Worryingly, the guidance stated that discharge to assess funding will end on 31 March 2022 – we are calling for this decision to be urgently reconsidered.
A new three-year NHS revenue settlement
In September 2021, the government announced a new 'health and social care levy', funded by increasing national insurance payments by 1.25% for both employers and employees. This will raise an average of £12bn a year for the next three years. The £36bn total has been widely quoted by the government.
As a UK-wide tax, some of the money raised will go to the devolved nations. The remaining increase to health and social care spending in England, as set out in the government's plan for health and social care, is £30.3bn:
- 2022/23 = £11.2bn
- 2023/24 = £9.0bn
- 2024/25 = £10.1bn
A significant proportion of these funds – around £15.8bn – is expected to go into the core NHS England budget:
- 2022/23 = £6.6bn (total budget = £149.4bn)
- 2023/24 = £3.6bn (total budget = £154.9bn)
- 2024/25 = £5.6bn (total budget = £160.1bn)
Approximately £8bn of the £15.8bn will go towards tackling the elective backlog, with the aim of delivering around 30% more elective activity by 2024/25 than before the pandemic. A full delivery plan is expected to follow at a later date.
So, where does this leave the NHS? Working with the NHS Confederation, we published a joint report at the start of September 2021 estimating that the NHS needs an extra £10bn in 2022/23 to tackle increased running costs, care backlogs and make allowance for efficiency savings that could not be delivered during the pandemic. Based on this, the NHS faces a challenging £3bn shortfall next year and we are concerned that trusts will have to make 'impossible choices' as a result.
The lack of precise detail in the government's health and care plan also leaves many unanswered questions, especially with regard to ensuring mental health, community, ambulance and primary care services can respond to rising demand.
Social care funding
The health and social care levy is expected to raise a total of £5.4bn for social care cumulatively over the next three years. The government has also announced a series of important reforms for the sector:
- An £86,000 cap on personal care costs from October 2023.
- A more generous means-test threshold (and 'floor') to provide financial assistance to those without substantial assets – anyone with assets less than £20,000 will not have to make any contribution to their care, and those with assets between £20,000 and £100,000 will be eligible for some local authority support.
- Wider support for the social care system, including £500m towards the development and wellbeing of social care staff.
Although the extra funding for social care is welcome, it is unlikely to deliver the level of reform needed fast enough. In the coming months, the government is expected to co-produce a white paper on adult social care reform, and publish a national plan on health and social care integration, including a set of system-based health and care outcomes that integrated care systems will be asked to deliver.
What does this mean for governors?
Governors may wish to find out how much of the extra £5.4bn for the NHS over the next six months will reach their local system and whether their trust has bid for any of the £700m targeted investment fund. As the next financial year approaches it may be helpful to understand what additional money will be available for their systems, and gain assurance on how this will be used, including on tackling elective backlogs. Thinking about the longer term picture and looking ahead to the comprehensive spending review on 27 October, governors should note that the government still needs to confirm a multi-year capital settlement for the NHS, as well as training, public health and local authority budgets.