An influential analysis reveals that NHS funding is at risk for the most significant decrease in real value since the 1970s. As a result, there is increasing pressure on Jeremy Hunt to prioritize public service funding instead of tax cuts in the upcoming budget.
The Guardian has discovered that the chancellor intends to crack down on the NHS’s expenditure of £4.6bn per year on agency employees who fill in for shortages of doctors and nurses on the frontline.
According to the Institute for Fiscal Studies (IfS), health spending in England will experience a reduction of 1.2% (equivalent to £2bn) in the upcoming fiscal year. This is despite the NHS facing additional expenses from ongoing pay strikes and the growth of its staff.
The NHS will receive almost all of the health budget, which will decrease from £168.2bn in 2023-24 to £166.2bn in 2024-25, adjusted for inflation in 2022-23.
The thinktank warned that without a reconsideration by the government, the decrease in funding will result in the NHS cutting its number of staff, staff salaries, the services offered to patients, or all three.
Hunt is currently contemplating reducing his budget for public spending in order to finance potential cuts to income tax or national insurance in the upcoming budget. This intervention will likely occur if he decides to pursue further cuts.
Economists have determined that this action would result in a reduction of approximately 20% in funds allocated to specific “unprotected” departments during the five-year term of parliament. This would include departments in sectors like justice, home affairs, and local government.
On Monday evening, there were also indications that the chancellor was considering providing drivers with a £5 billion increase by prolonging the “temporary” 5p-per-liter reduction in fuel tax for an additional year.
The proposed amount of government spending for the upcoming parliament may result in reductions similar to those carried out by David Cameron’s administration during the period of financial constraint from 2010 to 2015. This has led to concerns that the future government may struggle to enact these cuts and may have to resort to increasing taxes or borrowing additional funds for essential expenses.
The Liberal Democrats strongly criticized the proposal to reduce the budget for the NHS, calling it “outrageous”. Leaders of doctors’ associations expressed concern that it would negatively impact patients. Hospital administrators also raised concerns, stating that the potential cost of 15 months of strikes, estimated at £2bn, has left their finances in a precarious state.
Sarah Olney, the spokesperson for the Liberal Democrats’ Treasury, stated that the actions taken by the Conservative government towards the NHS are extremely scandalous. The inadequate funding of healthcare services has put a heavy burden on patients, showcasing the government’s neglect.
She strongly advised Hunt to eliminate the proposed decrease in budget that he is expected to present to Members of Parliament on Wednesday.
At the same time, doctors from hospitals expressed concern that the NHS is constantly facing a crisis and is unable to keep up with the increasing need for medical attention. They believe that moving forward with the proposed budget cut could have severe consequences, possibly even causing harm to patients.
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Many agree that the current state of the NHS is extremely difficult. While funding is not the only answer, it is a critical factor. Decreasing funding now could have dire consequences.
David Phillips, the associate director at the IFS who conducted the study, stated that the current government spending plans would result in a decrease of around 1.2% in day-to-day spending for the NHS in 2024/25. This would be the biggest cut in real terms since the 1970s, excluding the past two years when temporary funding related to the Covid-19 pandemic was in place.
“Decreasing real-terms funding for healthcare would entail a mix of staff cuts, salary reductions, and service adjustments.”
Phillips revealed that in the current fiscal year, the government had to provide the Department of Health and Social Care with an urgent boost of £4.4 billion from the Treasury. This was necessary to prevent them and the NHS from exceeding their budget. However, the DSHC did not make this information public.
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The estimated amount of money that the NHS received was approximately £4 billion out of the total of £4.4 billion. This funding was intended for staff salary increases, expenses related to industrial strikes, initiatives to assist the service during the winter, and their portion of the healthcare surcharge paid by migrants or their employers to cover their healthcare costs within the NHS.
The initial budget for DHSC in 2023-24 was set at £164.2bn. However, it increased to £168.2bn due to ministers providing a £4bn “in-year bung,” according to health economists, to prevent a deficit.
Phillips explained that although the department was supposed to receive a budget of £166.2 billion for the 2024-25 period, they actually received an additional £4.4 billion this year. As a result, the budget for next year was projected to be £2 billion less, which prompted the intervention from the IfS.
Julian Hartley, the chief executive of NHS Providers, which represents health service trusts, said: “These figures will ring alarm bells for trust leaders who are already struggling to provide patient care in a hugely challenging financial environment.
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“The National Health Service is facing a substantial bill as a result of 15 months of strikes, which have caused a loss of revenue from postponed surgeries, scans, and procedures, as well as the cost of providing coverage for the striking employees.”
“Due to ongoing industrial strikes, there is concern among trust leaders that these expenditures will persist into the upcoming fiscal year. As the NHS budget is already strained by this labor dispute, it is crucial for the Treasury to fully cover the costs incurred by trusts.”
Hunt is also expected to reveal plans to tighten restrictions on the NHS’s financial contributions to staffing agencies, which total £4.6 billion in the UK and £3.5 billion in England alone. These measures are based on a review conducted by the Treasury to increase productivity in the public sector. A cap will be implemented on the overall amount that the NHS can allocate to these agencies.
Wes Streeting, the shadow health secretary, labelled the chancellor “hypocrite Hunt” because the DHSC last year raised the annual cap for such spending by £450m. Streeting also pointed out that in 2015, when Hunt was the health secretary, he announced a similar crackdown on agencies which charged “extortionate hourly rates which cost billions of pounds a year”.
Streeting claimed that the public is facing significant costs due to the Conservative party’s failure over a 14-year period.
The Conservative party neglected to provide necessary training for doctors and nurses in the NHS, resulting in the reliance on expensive recruitment agencies. Furthermore, they instigated the most severe strike in the history of the NHS, causing longer wait times for patients and increased expenses for taxpayers.
“I hope Hunt, who is a hypocrite, will clean up the mess he created, but it’s like asking the person who started the fire to try to put it out – it’s unlikely to happen.”
The DHSC was asked for its reply.
Source: theguardian.com
