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What you need to know about May’s NHS funding plans

What you need to know about May’s NHS funding plans
By Léa Legraien Reporter
18 June 2018

Prime Minister Theresa May has today announced that the NHS budget will increase by £20.5bn in real terms – accounting for inflation – by 2023/24.

Here are six things you need to know about her funding plans.

1) What has been announced?

Speaking at the Royal Free Hospital in London today – a speech broadcast live by The Guardian – Prime Minister Theresa May revealed that the NHS budget will increase by £20.5bn in real terms, compared with today, by 2023/24.

This means NHS funding will grow on average 3.4% in real terms each year between 2019 and 2023/24 – which represents £394m more a week.

Over the last few years, the NHS has faced more demands than ever before. Ms May highlights that ‘we cannot continue to put a sticking plaster on the NHS budget each year’,  keeping it going with one-off cash injections.

She says: ‘Over the last 70 years, increases and funding have often been inconsistent and shorter, creating uncertainty about what the funding position would be in [as] little as two years’ time.

‘This has led to a system of planning from one year to the next, preventing much needed investments in technology, buildings and workforce.’

2) Why now?

With the NHS turning 70 on 5 July, Ms May believes this is the right time to look at how we secure the NHS’s future for generations to come.

She adds: ‘[…]This great national institution that is there for us from cradle to grave should remain in public hands not just now or [for] the next 70 years but forever.

‘So today, […] I want to talk about how we preserve those values of fairness on which the NHS was founded while building the NHS of the future, ensuring it will be there for our children and grandchildren and beyond, just as it’s been there for us in the past.’

Ms May argues that continuous underspending in the NHS is due to the difficult decisions taken to fix public finances.

She says: ‘Over the same period, the demand on our health service has grown and much of this growth is a consequence of other welcomed developments.

‘As we grow wealthier as a nation it’s natural [that] we want to spend more of our national income on being a healthier nation too.

‘Medical research and scientific discoveries mean there are more and better treatments available and we’re living longer than ever before. But that often means people living with complex and multiple conditions.

‘Malnutrition has given way to obesity […]. Our mental health is under growing pressures in modern society. For reasons good and bad, the NHS is facing rising demands for more treatment and longer and ever more complex care.’ 

3) Is the funding enough?

Although the new funding is welcome, it is not enough to ‘save the NHS after eight years of austerity’, the Labour party argues.

Many leading healthcare bodies agree that the proposed funding falls short of the extra 4% a year needed to secure ‘modest improvements in NHS services’.

According to the Nuffield Trust, the 3.4% increase only applies to the NHS revenue budget. When applied to the entire Department of Health and Social Care budget, it calculates that the increase is more likely to be around 3%.

The Nuffield Trust says: ‘This increase is not quite all it seems, […] it leaves out spending on things like training staff, building hospitals and public health.

‘Leaving out these crucial areas will make it much harder for the NHS to realise its plans to tackle the growing crisis facing the NHS workforce and to shift towards a focus on preventing ill health.

Ms May says that the Government will set out a 10-year plan for the NHS’s future later this year.

4) Where will the money come from? 

Ms May said some of the funding will come from the money the UK will no longer be spending on its annual EU membership subscription following the 2016 Brexit vote. However, many commentators criticised Ms May over the  Brexit dividend claim.

They argued that this cannot be used to fund the extra investment required to sustain the NHS as it fails to take into account the ‘divorce’ settlement due to be paid to the EU, and the predicted weakening of the UK economy as a result of leaving the European Union – a development that would result in lower household tax contributions.

Vocal critics include Institute for Fiscal Studies (IFS) director Paul Johnson, who tweeted that ‘ Financial settlement with EU plus commitments to replace EU funding already uses up all of our EU contributions in 2022. There is no Brexit dividend.’

Ms May also suggests that taxpayers will have to ‘contribute a bit more’ to support the NHS. A consultation with more details will be released in due course but Ms May says further contributions will be implemented in a ‘fair and balanced way’

The IFS believes that in order to meet future health and social care pressures, taxes would need to rise by between 1.6% and 2.6% of GDP.

5) What are May’s top priorities for the NHS?

– Patients. Putting the patient at the heart of how we organise care

– Workforce. A workforce empowered to deliver the NHS of the future

– Technology. Harnessing the power of innovation

– Prevention. A focus on prevention, not just cure

– Wellbeing. True parity of care between mental and physical health

6) What about social care?

Although Ms May acknowledges that ‘we also need to improve social care’, no dedicated funding settlement was announced today.

Glen Garrod, president of the Association of Directors of Adult Social Services, argues that investing money in the NHS without also putting it into social care is like ‘pouring water down a sink with no plug in’.

He says: ‘There’s sufficient evidence that investing in healthcare delivers only a partial solution to better meeting the health and social care needs of many people in society.

‘If we want to truly transform lives and reduce the pressures on hospitals, we must invest in supporting people at home, in their communities.’

Ms May says the Government will bring forward proposals to put social care on a ‘more sustainable footing’, with a budget announcement for social care and public health to be made during the spending review in the autumn.

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