Skip to main content

NHS Funding

Volume 776: debated on Monday 31 October 2016


My Lords, with permission, I will repeat as a Statement the response given by my right honourable friend the Secretary of State for Health to an Urgent Question in another place on NHS finances.

“Mr Speaker, compared to five years ago, the NHS is responsible for a million more over-75s. In five years’ time there will be another million. Our determination is to look after each and every NHS patient with the highest standards of safety and care, but there is no question that the pressures of an ageing population make this uniquely challenging. I therefore welcome the chance to remind the House of this Government’s repeated commitment to support the NHS. The NHS budget has increased in real terms every year since 2010. NHS spending has increased as a proportion of total government spending every year since 2010 and was 10.1% higher per head in 2014-15 in real terms than when we came to office. The OECD says that our spending is 10% higher than the OECD average for developed countries and, at 9.9% of GDP, it is about the same as other western European countries, for which the average is 9.8%.

Given the particularly challenging current circumstances, however, in 2014 the NHS stepped back and for the first time put together its own plan for the future. It was an excellent plan, based on the principle that because prevention is better than cure, we need to be much better at looking after people closer to or in their homes instead of waiting until they need expensive hospital treatment. The plan asked for a minimum of an £8 billion increase in NHS funding over five years. It asked for this to be frontloaded to allow the NHS to invest in new models of care up-front. Following last year’s spending review, I can confirm to the House that the NHS will in fact receive an increase of £10 billion in real terms over the six years since the Five Year Forward View was published. In cash terms, that will see the NHS budget increase from £98.1 billion in 2014-15 to £119.9 billion in 2020-21—a highly significant rise at a time when public finances are severely constrained by the deficit this Government regrettably inherited.

Because the particular priority of the NHS was to frontload the settlement, £6 billion of the £10 billion increase comes before the end of the first two years of the spending review, including a £3.8 billion real terms’ increase this year alone, something that represents a 52% higher increase in just one year than the party opposite was promising over the lifetime of this Parliament”.

My Lords, I am very grateful to the noble Lord for repeating that, but I am afraid that his attempt to gloss over the real story of the Government’s manipulation of NHS funding figures simply will not wash. The Government have been found out by the considerable and Conservative chairman of the Health Select Committee, Dr Sarah Wollaston. She has pointed out that the so-called extra £10 billion can be arrived at only through significant manipulation of the figures, including an extra year in the spending review period, changing the date from which the real terms’ increase is calculated, and disregarding the total health budget.

The Nuffield Trust pointed out in a report this morning that the £8 billion figure—which is the real figure, not the £10 billion figure—

“has been flattered by redefining what counts as ‘the NHS’. In the past, the government used to count NHS spending as the entire Department of Health budget for England. Now it only counts the subset of that spending that comes under the control of the department’s commissioning arm, NHS England. Only ‘NHS England’ is protected with ‘real-terms increases’ while the rest of Department of Health spending will be cut by £3 billion by 2020-21”.

Therefore, not only is the £10 billion or £8 billion a wild exaggeration: but the fact is that the NHS is facing an acute funding crisis, wholesale rationing of services and the denial of life-enhancing medicines to many patients.

I would like to put three points to the Minister. First, I see that he quoted OECD figures, but looking at the latest OECD per-capita spend on health, I note that 18 countries in the OECD group have a higher GDP spend on health than we do in this country. Can he confirm that, compared to any country of equally sizeable wealth, we have fewer doctors, fewer nurses, fewer beds and less access to medicines and new medical equipment?

Secondly, when the Minister says that the £8 billion was what the NHS asked for, can he confirm that the NHS did not ask for £8 billion, but indeed took no part in any discussions? There were discussions with NHS England, which is a government-appointed quango and is not the National Health Service. Can he also confirm that, in negotiations, the Government themselves—including the Treasury—told the chief executive of NHS England that £8 billion was the maximum amount that he could call for?

Finally, on the five-year forward plan—the underpinning of it by sustainability and transformation plans—can the noble Lord confirm that first analysis shows that swingeing reductions are to be made in acute care without any guarantees that community and other services will be put in their place to reduce demand on acute services?

My Lords, I will try to respond to those last three points. First, the noble Lord is right: the NHS is—and I would regard it still as—the highest-value healthcare system in the world. It does have fewer doctors and MRI machines—however you want to measure it—compared to many other OECD countries, but its outcomes, on the whole, are very good. I can, therefore, certainly confirm that the NHS is a very high-value healthcare system. As far as the involvement of the NHS in the plan is concerned, it was very much put together by the NHS and signed by all of the arm’s-length bodies at the time. This is a quote from Simon Stevens about the spending round settlement:

“This settlement is a clear and highly welcome acceptance of our argument for frontloaded NHS investment. It will help stabilise current pressures on hospitals, GPs, and mental health services, and kick-start the NHS Five Year Forward View’s fundamental redesign of care”.

This brings me to my last point, the fundamental redesign of care. That was possibly not really recognised at the time of the NHS review, because it is a fundamental redesign of care. As the noble Lord said, it means moving resources away from acute settings into community settings, very much as mental health care was restructured 20 or 25 years ago.

My Lords, the Secretary of State said that there were going to be another million over-75 year-olds in five years’ time, and I very much hope that I am going to be one of them. May I give the noble Lord a couple of other statistics? The King’s Fund quarterly monitoring report found that, for each month in the first quarter of this year, there were an additional 54,000 attendances at A&E departments and 14,200 emergency hospital admissions compared to the same time last year. All these emergencies are no way to run a health service.

The noble Lord and the Secretary of State pray in aid the five-year forward view as if it were a statement of fact. It is a plan; it is an aspiration, and at the time it was written, the hole in the funding of the NHS was not £4.5 billion, as the Select Committee says has been given to the health service; it was not £8 billion or £10 billion: it was £30 billion. The Government gave about a third of it and suggested, through the five-year forward aspirational plan, that the rest could be done by efficiencies. We have the STPs, which are supposed to find those efficiencies. We have heard many times in this House over the last few weeks about the shortcomings of those, so when will the Government respond to my right honourable friend Norman Lamb when he calls for a cross-party commission on proper funding of social care and the health service?

My Lords, I am sure that the noble Baroness will be here well past the age of 75, and that there are many years to come before she reaches that age.

The noble Baroness is absolutely right: for many elderly people, the worst way to be treated, frankly, is to be blue-lighted in an ambulance into an A&E department of a very busy acute hospital. The whole purpose of the five-year forward view is to deliver care to many more such people outside. I think we all agree with that. The noble Baroness’s party, like ours, agreed with the £8 billion of extra government spending over the course of this Parliament, and accepted the fact that very significant efficiencies could be generated from the NHS. We still subscribe to that view, and the STPs will be the right vehicle for delivering many of them.

My Lords, the Minister rightly referred to the realities that are required of a fundamental redesign of care. The point has just been made, and was made in the report from the House of Commons this morning, that that must include looking, at last, at the connection between social services budgets and the health service budget. This is one of the major factors. It will not solve all the problems, but it is a critical point that Government after Government have ignored for the last 20 years.

I entirely agree with the comments made by the noble Lord. We have to integrate health and social care to a much greater extent. We also have to integrate healthcare: healthcare is delivered in silos and is highly fragmented around the country, and that comes out of the same budget, so he is absolutely right. However, we have to recognise that another massive reorganisation between social care and healthcare could be highly disruptive. The great beauty of the STP process is that people in local areas—local authorities, health providers and commissioners—are sitting around tables coming up with plans for their local areas.

My Lords, does my noble friend agree that it is only by virtue of the 2012 Act that NHS England is an independent body, able to express, on behalf of the NHS, a plan for the future, and that this would not have been possible otherwise? Will he further confirm that the coalition Government, in the last Parliament, met their promise to increase the NHS budget in real terms, year on year, but that that promise applied to an NHS budget that included public health and NHS education and training? The NHS’s future sustainability requires a more preventive approach and increased numbers of domestically trained NHS staff.

I entirely agree with my noble friend that the independence of NHS England has been very important. Had the NHS plan been developed by politicians it would have had a lot less credibility. I entirely agree that prevention and public health are hugely important, but of course it takes a long time for public health initiatives to have an impact, so I do not think that any reductions in them in the last two years will have any major impact over the five-year period. Clearly, it will have an impact over a longer period. As for the changes to Health Education England, those savings have largely been generated by moving from a bursary system for nurses to a loans system, which will actually deliver more nurses and therefore help to deliver the five-year forward view.

My Lords, is the Minister saying that there are no financial pressures on the NHS? If he is, that is contrary to every piece of evidence that the House of Lords Select Committee on the Long-Term Sustainability of the NHS has heard. Furthermore, it is the lack of a settlement in social care that is killing healthcare. Is it not time that we had a new settlement for both healthcare and social care that is sustainable in the long term?

My Lords, I acknowledge that there is tremendous pressure on all parts of the health service and in social care, but if there is not pressure, there will not be change. Getting the radical, fundamental change we need in the health service will not be achieved if we just pour more money into the existing system: we have to have change.