• Rishi Sunak’s 2021 Spending Review has locked the NHS on course for a huge funding shortfall.
  • In December 2022 NHS England’s Board heard that it faced a massive target of £12bn ‘savings’ by 2025 to balance the books.
  • Local NHS commissioning boards are already contending with large deficits sending a warning to Labour that if they win the next election a substantial transfusion of extra investment is needed.

A new blog on NHS funding by the Nuffield Trust’s Sally Gainsbury highlights the scale of the problems coming down the line for whichever party wins the next election, which must take place by the end of next year.

She sums up “politicians are turning their attention to ever-more ingenious ways to promise a better NHS while avoiding a commitment to find extra money to pay for it.”

But the issue of funding can’t be wished away, and it seems that if Labour were to win the new government would not even have the option of sticking with Tory spending limits for three years, as Tony Blair’s government opted to do in 1997.

The situation is so urgent and serious, argues Gainsbury, that “whoever is in charge of public spending next week (let alone next year) is going to have to find the health service extra cash immediately, and in substantial quantities.”

Theresa May’s government back in 2018 promised to increase NHS spending by £20.5bn in real terms by 2023/24: this same money was later misleadingly translated into Boris Johnson’s promise to increase spending by £33.9 billion – in cash terms.

But in 2020/22 the Covid pandemic led to spending of £23bn being added to the NHS budget, even though billions of that was squandered on ineffective privatised test and trace and dodgy contracts for PPE.

But the Tory promise to spend whatever the NHS needed to deal with Covid didn’t last very long: by the time of chancellor Rishi Sunak’s 2021 Spending Review he had locked the NHS on course for a second decade of decline. By January 2022 he was warning that the limited NHS budget would not cover the extra costs of booster jabs for the latest variant of Coronavirus.

Sunak himself, according to a Spectator article, was also leading a cabal of cabinet ministers who are critical of the NHS itself – and, according to the Financial Times, he had held meetings with US health corporation bosses.

NHS England was told it would have to rapidly “converge” back to the original planned levels of funding set out in 2018. Gainsbury shows that this amounted to a 3.7% real-terms cut in the original NHS budget for the 2022/23 financial year, as extra spending growth related to Covid was very rapidly clawed back.

It has also left England’s NHS with an opening budget for the current financial year around £2 billion lower than it would have received under the original Long Term Plan in 2018.

In December 2022 NHS England’s Board heard that it faced a massive target of £12bn ‘savings’ by 2025 to balance the books, with a real terms cut of 2.1% in 2022/23, and increases of just 2.6% this year and 2% in 2024/25 – well below the 4% increase per year required to keep pace with the growing health needs of the population.

Gainsbury explains what this means in cash terms. Next year is set to be worse again, with “NHS England’s funding for the year starting in April 2024 £5 billion less than the funding it would have received had the Long Term Plan trajectory rolled forward a sixth year.”

She argues that the £5 billion gap is “not a realistic figure:

“Not three years on from a pandemic; not with over 7 million patients on an NHS waiting list; not when the Long Term Plan service improvements and expansions remain the expectation; and certainly not when the current rate of actual spending means the figure will be breached many times over anyway.”

She points out that unless there is a change of direction soon, the consequences could be dire: “Organisations eyeing an impossible budget will simply have to cut staff, cut clinics, cut operating theatres, and cut service investment to fit.”

Recent reports in the Health Service Journal confirm the dire situation facing Integrated Care Boards (ICBs) this financial year, overspending by £800m in total just a few months into the year, with all of the ICBs having failed so far to meet their financial plans, and four ICBs (Greater Manchester, Lancashire & South Cumbria, Hampshire & Isle of Wight and Cheshire & Merseyside) each already more than £100 million adrift.

The HSJ reports negotiations between NHS England and the Treasury on how to cover “a total NHS revenue funding gap expected to be around £1bn for 2023-24,” which both sides are choosing to blame on the industrial action that has brought increased spending on agency staff.

But a £1bn deficit seems to be a highly optimistic projection for a year-long deficit that is already at £800m, especially since most of the 42 ICBs had to be bullied into submitting break-even plans (many of them based on ambitious targets for savings that had not yet been identified) after initially forecasting deficits totalling £6bn, with four regions each expecting to be more than £1bn in the red.

Even if NHS England manages to force some concessions from the Treasury, it seems certain that by the second half of next year trusts and ICBs will be deeper in the red than they are now, and that the £10.2 billion backlog bill for maintenance (certain to increase when the new figures are published later this month) and the bill for rebuilding seven of the hospitals most at risk of collapse due to faulty RAAC concrete will be unresolved.

So whether or not Keir Starmer and the Labour leadership want to admit it, the NHS will need a very substantial transfusion of new cash if it is to avoid a collapse of front-line services in many areas, a waiting list climbing ever closer towards 10 million, and a further haemorrhage of demoralised, burnt out staff.

The SOSNHS demand for a £20bn cash injection to kick start a new decade of investment to repair the damage done since 2010 now seems like a bare minimum starting point, although the impact of austerity has been so widespread the NHS is far from the only area where a substantial increase in spending is required.

This was spelled out by a recent letter to Keir Starmer from 70 leading academics and economists pointing to the need to increase spending to reverse a number of key Tory welfare cuts that are undermining the health of the very poorest families.

There is so much scope to raise taxation from the billionaires, millionaires, banks, energy companies and other businesses that have pocketed huge profits before during and since Covid that there will be little sympathy for a Labour government presiding over further years of decline in vital public services and the living standards of the poorest and most vulnerable.

If sacrifices have to be made, much better they be made by the wealthy few as soon as possible rather than prolong and deepen the misery of the vast majority who have lost so much already.


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