What the autumn 2021 budget and spending review mean for the NHS

NHS funding announcements have come thick and fast over the past few months. The 2021 autumn budget and spending review provided more clarity on the government's financial plans up to 2024/25, but a lack of detail on future education and training, social care and public health budgets is a significant concern for trust leaders.


Recap of the revenue budget


In September 2021, the government announced a new 1.25% levy to help fund health and social care services across the UK. An updated office for budget responsibility forecast shows the levy is now estimated to raise around £13bn per year across the spending review period, rather than the £12bn originally predicted. Roughly £16bn will go to the NHS in England from 2022/23 to 2024/25, including over £8bn to tackle the elective backlog. The remainder will be split between central Department of Health and Social Care (DHSC) spending, social care and the NHS in the devolved nations.

When you combine the funds raised via the levy with other adjustments made by the treasury – for example, to cover cost pressures as a result of the updated inflation forecast – the total uplift to the NHS England and NHS Improvement budget is projected to be £23.2bn over the next three years compared to the government's pre-spending review baseline (£9bn in 2022/23, £6.1bn in 2023/24 and £8.1bn in 2024/25). A further £9.6bn will be invested by DHSC in key COVID-19 programmes such as vaccination campaigns and targeted testing.

Table 1 | NHS England and NHS Improvement funding  

 

2022/23 

2023/24 

2024/25 

NHS England and NHS Improvement baseline budget (£bn)1 

142.8 

151.3 

154.5 

NHS England and NHS Improvement updated budget (£bn)2 

151.8 

157.4 

162.6 

Uplift (£bn) 

9.0 

6.1 

8.1 


In exchange for the funding boost, the government expects the NHS to rapidly tackle the care backlog and reduce waiting lists – but this is a big challenge. NHS Providers and the NHS Confederation estimate the NHS needs an additional £10bn in 2022/23 to cover ongoing COVID-19 costs, address the care backlog (across all sectors) and make appropriate allowance for lost efficiency savings. Therefore, while the extra money is gladly received, it still falls short and leaves trust leaders facing difficult choices about how to prioritise care for patients. The government will also need to keep the funding available to the NHS under review, given the ongoing uncertainties presented by the pandemic.


Capital budget gets a boost


After years of underinvestment and capital being diverted into revenue, it is extremely welcome that DHSC has been set a multi-year capital budget, rising from £9.4bn in 2021/22 to £11.2bn in 2024/25. DHSC's capital budget includes £5.9bn for the NHS over the next three years to support elective recovery and improve digital technology: £2.3bn for the transformation of diagnostic services; £1.5bn for new surgical hubs, increased bed capacity and equipment; and £2.1bn for innovative use of digital technology.

The government also announced £150m additional capital up to 2024/25 to invest in NHS mental health facilities linked to A&E and enhance patient safety in mental health units. This builds on £300m previously announced for the replacement of mental health dormitory wards with single en-suite rooms. Despite these positive steps, the many demands on the capital budget means funds will be stretched.

It is unclear how much money will be allocated to integrated care systems in 2022/23 and beyond to tackle the growing maintenance backlog, which now stands at £9.2bn. A lack of long-term funding beyond 2024/25 is also casting doubt over the delivery of the government's manifesto pledge to build 40 new hospitals by 2030 and upgrade a further 70. On top of all this, it is vital that the system for accessing and allocating capital is reformed in consultation with those planning and delivering services. Funds must reach trusts quickly and be distributed according to the principle of subsidiarity if the NHS is to make the most of every pound. 


The big unanswered questions


There were worrying gaps in the spending review that cannot be ignored. Chief among these is the absence of any detail regarding the Health Education England budget. Staff shortages and unsustainably high workloads are the NHS' biggest challenges. The health service urgently needs a robust, long-term workforce plan, as well as increased investment in workforce expansion, education and training. 

It is also deeply disappointing not to see greater acknowledgement of the difficulties faced by providers of mental health, community and ambulance services, despite unprecedented pressures and clear patient need. NHS England and NHS Improvement will need to set out the specific support available to these trusts when it publishes priorities and operational planning guidance for 2022/23 later in the year.

Another significant concern is the continued financial squeeze on social care and public health services. While the spending review confirmed some additional resources for local government, there was little information on the government's future plans for social care and public health. Meaningful reform appears to be a long way off.


Next steps


The uplifts to the NHS' revenue and capital budgets should be welcomed, especially given the seismic impact of COVID-19 on public finances. Trust leaders know the government expects them to achieve stretching outcomes and performance metrics in return. Now, to truly meet patients' needs, the government must address persistent workforce shortages and take urgent action on social care and public health.

This blog was first published by Public Finance.

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