The outlook for NHS
and Adult Social Care
funding
John Appleby
September 2010
©The King’s Fund 2010
The Coalition Emergency Budget outlines tax
rises and spending cuts…
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…which imply between 25% and 40% real cuts
in all unprotected spending departments…
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Adult social care funding will be under terrific
pressure.
Historically, the 50% real increase in total public since 1997
spending has not kept pace with demand, expectations and desire
for higher quality care
An increasing proportion of care funding borne by council tax – up
to 39% now, but as high as 80% for some councils.
Eligibility/access criteria now pretty tight too.
Plurality of funding contributing to social care: £4.4 bn AA; £9.8
billion DLA; £2 billion user charges; £5 billion (?) out of pocket
spending.
©The King’s Fund 2010
Councils planning real total spend reductions of 25% over three
years
Social care services could be protected – but only up to a point,
and depends on financial positions of individual councils. Little
room for manoeuvre financially.
Expectation is higher user charges, even tighter eligibility criteria,
some efficiency savings/productivity gains(?)
Inevitable implications for health care….delayed discharges?
Higher avoidable admissions?
Pressure too on the benefits side: switch to CPI from RPI for
benefits uprating; tightening of medical criteria for DLA (to reduce
claims by 20%)….
But, some expectation that NHS may transfer funds….
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…but the NHS is protected from cuts
We will guarantee that health
spending increases in real terms
in each year of the Parliament,
while recognising the impact this
decision will have on other
departments
The Spending Review will reveal how much the NHS gets –
but it is unlikely to be anything like the 6% to 7% real
increases it has received over the last nine years…
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If the NHS got 1% real increase each year…
1% pa real increase
implies falling share of
GDP for health
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Although protected from real cuts, the NHS will face increasing
demand and cost pressures over the next few years…
If we want to meet these and improve the quality of services the
NHS will have to improve its productivity – and hopefully its
efficiency
With no real rise and no productivity improvement, meeting
Wanless’s aspirations for the NHS in 2013/14 requires
productivity improvements to the value of around £21 billion –
around 20% of the current English NHS budget.
©The King’s Fund 2010
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But why improve
productivity… to do
what, precisely?
£126billion
NHS funding needed in 2013/14 to meet Wanless NHS ‘vision’
Real pay
and prices
Improve quality
£3.5 Bn
£1.6 Bn £1.8 Bn
£1.4 Bn
billion
Shortfall if no real rise for
next 3 years and no
productivity
improvement
£0.4 Bn
Capital
Demand drivers
Clinical governance
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Waiting times
£21
£12 Bn
£21
billion
..around 6% productivity
gain each year for three
years..
Year on year productivity gains of around 6% is a
hugely daunting task for the NHS. But there is
some relief…
Funding gap with no real increase in spending and no
productivity gains..
£14 billion
..around 4.5%
productivity gain
each year for three
years
Productivity gap with pay and capital spend
freeze and no further investment in reducing
waiting times..
£11 billion
..around 3.5%
productivity gain
each year for three
years
©The King’s Fund 2010
Productivity gap with pay
and capital spend freeze,
no further investment in
reducing waiting
times…and 1% real
spending increase each
year to 2013/14
Although with some tough decisions on pay, capital and waiting
times, together with a modest real increase in funding, the
productivity challenge will be less daunting, it is still significant.
The question now is what, in practical terms, the NHS needs to
do.
The questions for social care are much more difficult….
©The King’s Fund 2010
Thank you
John Appleby
Chief Economist
[email protected]
©The King’s Fund 2010