Budget 2020: Key takeaways for health spending
Only two weeks after his appointment, new Chancellor Rishi Sunak MP had plenty of ground to cover in his first budget. Here are some of the key takeaways for the health and care sector.
With the Bank of England cutting interest rates on Wednesday, the new Government, with its very new Chancellor, has become emboldened to loosen the purse strings. Undoubtedly, this Government is far less concerned with borrowing than any of its predecessors. While a huge portion of this spending is geared for helping to deal with the outbreak, there are notable inclusions when it comes to health spending as the chancellor looks to capitalise on “historically low interest rates.”
Unsurprisingly, the financial backing to the Government’s response to coronavirus dominated much of the proceedings. To deal with the crisis, Mr Sunak stated that the NHS will get “whatever it needs, whatever the cost”.
Key coronavirus takeaways:
- A £30 billion funding package to support UK economy through the outbreak
- A £5 billion boost in emergency response funding to support NHS through outbreak
- £40 million of new funding for the National Institute for Health Research and the Department of Health and Social Care to enable further research into COVID-19
- Statutory Sick Pay (SSP) will now be available for eligible individuals diagnosed with COVID-19 or those who are unable to work because they are self-isolating
- £500 million Hardship Fund so local authorities can support economically vulnerable people and household.
Niall Dickson, Chief Executive of the NHS Confederation, said: “Covid-19’s spread means the NHS is undergoing one of the greatest challenges in its 70 plus year history.”
The Chancellor’s pledge of £5 billion investment to support public services in tackling the virus, with the promise of more if needed, is therefore good news. “We do not yet know how great the impact will be, but the service is bracing itself for a significant shock,” Mr Dickson concluded.
A unique budget for a unique time
The new Chancellor has fended off some criticisms from his own backbenches about the level of spending he has put forward to deal with the outbreak. Former Prime Minister Theresa May warned against a ‘short-terminist approach to spending, urging the Government to exercise “restraint and caution”
Mr Sunak has said that he makes “no apologies” for this budget and that it was “the right thing to do” to help tackle coronavirus. While describing the budget as a whole as an “admission of failure” Labour Leader Jeremy Corbyn did welcome the Governments steps to mitigate the economic impact of the virus.
The unique context of a global pandemic certainly makes this budget harder to judge than others in recent memory. Will the fiscal package designed to prop up the economy through the worst of the disruption be effective? Without knowing just how bad this virus will get its incredibly difficult to say.
The Chancellor has also unveiled plans to increase the annual allowance taper threshold on pensions to £200,000, which will prevent many NHS staff from incurring large tax charges. The changes will come into effect from April 6.
The announcement will come as welcome relief to many working on the NHS front line and has been roundly welcomed by health sector leaders. It is hoped the new changes will not deter NHS staff from taking up extra shifts.
Under current rules, staff earning more that £110,000 a year will see their tax-free allowance on pensions contributions shrink from £40,000 to £10,000. The changes mean that, from 2020-21, anyone earning less than £200,000 will not incur tax charges from the tapered allowance.
Chris Hopson, Chief Executive of NHS Providers said: “We are pleased the government has listened to the NHS’ serious concerns around pension tax and taken action. It is particularly good to see that the change benefits senior leaders and non-clinicians.
“We also recognise that this is a significant investment – £2.1 billion over 5 years. We understand this comes at a time when there are a number of other urgent priorities for investment.”
Welcome relief for a bitter dispute
Undoubtedly, careful consideration of this policy was required to assess the likely impact of this policy. It will be important to understand whether this change will enable the most experienced clinicians to predict whether they will receive an annual pension tax bill, and how large that will be.
The initial response, however, seems to have been one of relief. At a time of acute stress upon the health service, the delaying or cancelling of operations and clinics is an outcome few providers can afford. Ultimately, it is patients who will suffer. That many doctors were finding themselves financially worse off by conducting additional work clearly did not make sense. Clearly, this was a long-overdue policy.
The new budget also outlines several spending pledges on capital funding for healthcare.
According to the budget documents, the Department of Health and Social Care’s capital spending budget will increase by £683 million in 2020-21. This will be aimed at helping trusts to invest in estate refurbishments and building maintenance.
This additional funding includes £100 million which will be spent in 2020-21 to begin work on the 40 new hospitals promised by Prime Minister Boris Johnson during last years election campaign.
Is it enough?
Given the trajectory of NHS infrastructure investment over the past decade, any boost in capital will be welcomed. This Government has for its part made several promises to boost capital investment in the NHS – most notably with the election pledge to build 40 new hospitals.
That the Government is starting to back up their ambitious pledges with some cash is clearly good news. However, to truly rejuvenate the ageing NHS estate, this funding boost must form the start of a long-term multi-faceted approach to capital spending in healthcare – something that recent governments have avoided.
A rich capital funding strategy must also include mechanisms for prioritising capital spend based on need. While promises of 40 shiny new hospitals may have been effective vote winner, simply building new facilities won’t solve underlying problems in the sector. It will be any years before any of these facilities will be in a position to treat patients, many of whom are seeing service levels drop across the sector right now.
Backlog maintenance, which has had sharp increases in the past decade as trusts continue to divert funding streams to prop up revenue, currently stands at over £6 billion. A recent report from the Health Foundation found that short termism with capital finding had led trusts to abandoning major infrastructure projects. Repairing, repurposing and optimising our current estate should form the basis of the NHS capital strategy. The need for flexibility has only been amplified by the current coronavirus outbreak. while the additional funding is a start, it is far from clear whether this is truly the beginning of a long-term effort to rejuvenate the ageing NHS estate.
A £1 billion funding boost for social care was also announced for the next year, as was detailed in the 2019 budget. This year’s budget confirms this additional funding will continue every year of the current Parliament but does not detail any further funding.
A “missed opportunity”
Leaders from across the health and care sector have largely labelled the budget’s social care funding proposals as a missed opportunity.
“The failure to announce any real action to overhaul social care is the elephant in the room,” said Nuffield Trust Chief Economist Professor John Appleby.
Professor Appleby continued to say that the sector is reliant on “threadbare” services to keep thousands of vulnerable patients out of hospital – and yet we still will not give them the funding and reform they have desperately needed for years. “Coronavirus may serve as a reminder that inaction has consequences,” he concluded.
The ‘safety net’ that the NHS provides for social care will not hold out forever and continuously poor A&E performance figures across the country are a clear indication of that. That being said, we should not simply be looking at this through an NHS lens – the Government should save this sector because it is the right thing to do for the people who desperately need those services.
Workforce issues continue to cripple the social care sector, an issue only amplified by Brexit related restrictions on foreign workers. Additionally, the sector is in dire need of modernisation. Unfortunately, it seems that without a social care green paper, substantive solutions will be few and far between. Based on recent noises from the Department of Health, we shouldn’t be expecting that paper anytime soon.
It seems that when Health Secretary Matt Hancock made moves to develop a cross party consensus on the matter, he did so knowing that the budget contained little in the way of good news for social care.