Did #Budget2017 deliver for public services?
This blog takes a look at what this Budget delivered for social care, health and education.
In our pre-Budget blog we looked at what the Budget needed to deliver for public services, creaking after almost a decade of austerity.
Few could deny the intensifying crisis in social care. Cuts of over 9 per cent since 2010 have left over 400,000 fewer older people receiving state-funded care, relying on families and an increasingly stretched NHS to meet their needs.
And the government would have been keen to avoid the outrage and political fallout that arose from the Chancellor’s failure to acknowledge social care in the Autumn Statement last year and the underwhelming response cobbled together by Sajid Javid in response.
So there was always going to be serious pressure on Philip Hammond to deliver something significant for social care services and, to an extent, the Chancellor probably exceeded expectations. He announced £2bn of new funding over 3 years: £1bn will be frontloaded into 2017/18, to act as a bridge to the Better Care Fund coming on line towards the end of the parliament. This will provide some much needed relief and may go some way to helping build greater collaborative working between NHS providers and local authorities.
But it won’t go far, with an estimated 1.2m people over the age of 50 with unmet care needs. And that £2bn must be seen in the context of over £4.6bn cuts to the service between 2020 and 2015.
The announcement of another review into sustainable care funding will exasperate a few, this being the fourth such government review since 1999 – five if you throw in the independent Barker Review from 2014. We hope that any such review moves us closer to a properly integrated service, something that at least adheres to the Barker Review’s call for a “single ring-fenced budget for health and social care that is singly commissioned and within which entitlements are more closely aligned”.
The review will also need to address the financial sustainability of local government funding. From 2020, we will paying for social care through business rates and council tax alone – both subject to inequality and volatility and neither based on an assessment of need.
So much has been said about the impact of the social care crisis on NHS demand and bed capacity that some are tempted to lump them together. But the NHS faces its own financial problems above and beyond those it shares with social care.
And today’s announcement is much less good.
Hiding behind the by now widely discredited figure of £10bn real terms increase for the NHS in this parliament, the Chancellor announced no new money to keep the lights on and pay the wages, despite nearly half of all NHS Trusts facing a deficit at the end of this year.
Our analysis shows that using the government’s preferred GDP deflator measure of inflation, NHS funding per head in England will see zero real terms growth between 2015/16 and 2019/20. If we control for the more accurate health service inflation figure used by the government’s NHS regulator, we find health spending per head actually decreases by 2.6 per cent over this period. Even in cash terms there is zero growth in 2018/19 and just 0.3 per cent in 2019/20.
So we will continue to see health spend decrease as proportion of GDP, with us falling further behind other leading EU nations. We will continue to see the NHS exhorted to find impossible “efficiency savings” in order to plug the funding gap. And we will continue to see service rationing, cuts and reconfigurations driven by financial imperatives, not clinical need. The lack of new current funding for the NHS does not bode well for services.
This point is emphasised by the King’s Fund, Nuffield Trust and Health Foundation in their joint response to last year’s Autumn Statement:
The Department for Health’s budget will increase by just over £4bn in real terms between 2015/16 and 2020/21. This is not enough to maintain standards of care, meet rising demand from patients and deliver the transformation in services
Meanwhile, the funding announced to meet the capital requirements of Sustainability and Transformation Plans seems very thin. Analysis by the BMA suggests that STP capital requirements total around £9.5bn, with over half of the 44 areas requiring £100m each. The figures show that hospitals alone face a bill of £2bn to deal with “significant” or “high risk” maintenance needs.
The £325m available to meet some of the front runners looks meagre in comparison. The Chancellor’s promised more in the Autumn budget. Let’s wait and see.
After the NHS and social care, schools have rapidly become “the next big crisis” according to the BBC.
The National Audit Office reports that through a combination of real terms reductions in per pupil funding and large unfunded cost increases, schools across England are facing a £3bn funding shortfall by 2020. This requires them to find savings of 8 – 10 per cent – raising the prospect of cuts to staffing, a narrowing curriculum, the loss of pastoral care and support services and increased class sizes.
The government chose this Budget to put £320m of new money into expanding selective free schools. This demonstrates an audacious disregard for the interests of those parents, teaching unions and school leaders that were calling for a fairer and more sustainable funding settlement for the 24,000 existing schools facing an increasingly precarious funding situation.
With no new money for those schools, the DFE’s attempt to implement a new National Funding Formula will continue to be premised on impossible choices with very few schools gaining in net terms. It is fair to say that this issue is not going to go away: the Chancellor will be under intense pressure to deliver in the Autumn Budget.
As with the NHS, the injection of schools capital funding also looks woefully inadequate. The government has mooted £216m for school repairs, against a bill estimated by the DFE to be in the region of £6.7bn to return all schools to a satisfactory or better condition by 2020.
The removal of his predecessor’s target to achieve budget surplus by the end of this parliament prompted many to question whether Philip Hammond signalled a change of direction at the Treasury. But again today we were subjected to the mantra that a solid economy and healthy public finances are built on austerity, despite the lack of evidence of this actually working. David Laws suggested in the Financial Times this week that austerity was being pushed to the edge of social acceptability. There’s probably a few teaching assistants, midwives and care staff out there who might well think we’ve crossed that line already.