BMJ 2013;347:f6287 doi: 10.1136/bmj.f6287 (Published 22 October 2013)

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FEATURE DATA BRIEFING

What are we spending on the English NHS? John Appleby unravels the arguments about government claims that the NHS in England has seen increased funding John Appleby chief economist King’s Fund, London, UK

The chief executive of the English NHS, David Nicholson, recently called for politicians to be “completely transparent about the consequences of the financial settlements” for the NHS.1 His point was that, although politicians say the NHS has been protected financially, this was only relative to real cuts in other areas of government and, crucially, not in terms of the demands on healthcare.

The NHS is not alone. Across many countries in the Organisation for Economic Development spending on healthcare has slowed dramatically in the past few years as governments adjusted public spending in the wake of the global financial crisis and ensuing recessions.2 Some countries have experienced real falls in spending; others have seen a slowdown in growth. Across the four UK territories spending decisions have varied too. As the Institute for Fiscal Studies has recently noted, health spending in Wales will fall by 8.6% in real terms between 2010-11 and 2013-14.3 In England, however, health spend will have risen by just over 4% in real terms between 2009-10 and 2015-16.4 This is more than the government promised at the time of the 2010 spending round—largely as a result of lower than expected inflation rates (a sliver of a silver lining to the recession cloud). But, before we can get complete transparency about the consequences of these financial settlements, we need some transparency about the actual spending figures. The topline figures conceal complications.

Hidden losses

A particular problem over the past few years—and set to increase—is the fact that money may be allocated to one department but spent by another. This may make sense—it might be a more efficient way of doing things. It might also be a hangover from previous decisions. There are grey areas too. Should spending on social care (from the health budget) be classified as healthcare spending or social care spending? Piecing together the breaks in data and overlaps in allocations and spending that these decisions cause is tedious. But scrutiny

of the recently published Department of Health accounts for the English NHS,5 decisions in this year’s spending round,6 expenditure details on personal social services,7 and various NHS England board papers8 put a somewhat different slant on the headline figure for NHS spending in England.

Figure 1⇓ shows various transfers from the English NHS budget to local government since 2009-10. The picture is complicated, not just because some transfers were originally allocated to the NHS and then moved completely out of the NHS budget (such as the personal social services grant) but also because it is not always clear where responsibility lay historically for the provision of services for which money has been transferred (such as for learning disabilities). It’s also worth noting that from 2013-14, around £2.8bn (included in the black bars in the figure) will be used to pay for public health staff transferred from the NHS to local government. There’s no doubt that when transfers have not been linked to transfers of responsibilities (such as the public health money), the additional resources have helped local government at a time when its budgets have been under severe pressure and have helped support social care spending, which has been falling in real terms since 2010-11 (fig 2⇓).

However, decisions taken in the 2013 spending round will mean that in 2015-16 around £3.8bn (3.3% of the entire NHS budget) will be transferred from the NHS to local government as part of the “integration transformation fund.”9 This is equivalent to an average reduction in allocations to NHS purchasing organisations (clinical commissioning groups) of around £17m. As the name implies, the fund aims to help implement a more integrated approach to health and social care. This is surely a good thing.10 But as the chief finance officer for NHS England, Paul Baumann, has noted, “Moving resources . . . into a pooled budget with the intention of providing social care and community based services will require disinvestment in other services.”8 Baumann’s point about the opportunity cost for the NHS of transferring money into the integration fund is confirmed by figure 3⇓: a 2% real cut in resources for healthcare

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BMJ 2013;347:f6287 doi: 10.1136/bmj.f6287 (Published 22 October 2013)

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FEATURE

in 2015-16 and a 1.4% real cut over the period from 2009-10 to 2015-16.

But much depends on how the transferred money is spent and what benefits this will bring to the NHS as well as social care. The jointly agreed plans that have to be in place by April next year will offer some early clues. Competing interests: I have read and understood the BMJ Group policy on declaration of interests and have no relevant interests to declare. Provenance and peer review: Commissioned; externally peer reviewed. 1 2

West D. Competition rules hold back quality, says Nicholson. Health Service Journal 2013 Sep 5. www.hsj.co.uk/news/commissioning/exclusive-competition-rules-hold-back-qualitysays-nicholson/5063515.article?blocktitle=News&contentID=13251. Morgan D, Astolfi R. Health spending growth at zero. OECD Health Working Papers No 60. 2013 /www.oecd-ilibrary.org/docserver/download/5k4dd1st95xv.pdf? expires=1381244741&id=id&accname=guest& checksum=683DE8CE248E30BC9B94FDA7BAC59C91.

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3 4 5 6 7 8 9 10

Deaner B, Phillips D. Scenarios for the Welsh government budget to 2025-26, Institute for Fiscal Studies Report R83. 2013. www.ifs.org.uk/comms/r83.pdf. HM Treasury. Public expenditure statistical analyses: 2013. Cm 8663. www.gov.uk/ government/uploads/system/uploads/attachment_data/file/223600/public_expenditure_ statistical_analyses_2013.pdf. Department of Health. Annual report and accounts 2012-13 (for the period ended 31 March 2013). www.gov.uk/government/uploads/system/uploads/attachment_data/file/ 229996/Annual_Report.pdf. HM Treasury. Spending round 2013. Cmd 8639. www.gov.uk/government/uploads/system/ uploads/attachment_data/file/209036/spending-round-2013-complete.pdf. Health and Social Care Information Centre. Personal social services: expenditure and unit costs, England 2012-13. Provisional release, https://catalogue.ic.nhs.uk/publications/ social-care/expenditure/pss-exp-eng-12-13-prov/pss-exp-eng-12-13-prov-rpt.pdf. NHS England. NHS England board paper (NHSE 180712): outcome of 2015/16 spending round for NHS England. 2013. www.england.nhs.uk/2013/05/21/board-1805213/. Local Government Authority, NHS England. Statement on the health and social care integration transformation fund. 2013. www.england.nhs.uk/wp-content/uploads/2013/08/ itf-aug13.pdf King’s Fund. Joined up care: Sam’s story [video]. 2013. www.kingsfund.org.uk/audiovideo/joined-care-sams-story.

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BMJ 2013;347:f6287 doi: 10.1136/bmj.f6287 (Published 22 October 2013)

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Figures

Fig 1 English NHS spending 2009-10 to 2015-16 (2010-11 prices)5-8

Fig 2 NHS and adult social care spending in England, 2010-11 prices5-8

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BMJ 2013;347:f6287 doi: 10.1136/bmj.f6287 (Published 22 October 2013)

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Fig 3 Real annual changes in English NHS spending with and without transfers to local government, 2009-10 to 2015-165 6 8

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What are we spending on the English NHS?

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