Latest Public Sector News

01.12.14

Osborne to announce £2bn extra funding for NHS in Autumn Statement

George Osborne is set to use his Autumn Statement on Wednesday to announce an extra £2bn of funding to bolster and transform the NHS.

The chancellor is expected to say the money will be used to buy new services and facilities that will help transform the NHS making it more efficient for taxpayers and more effective for patients. It will also help the NHS to prepare to meet the challenges of an ageing population with people living longer.

Osborne is also expected to endorse the proposals set out by NHS England chief executive Simon Stevens in his Five Year Forward View, in which he described the best way to deliver “a world class and universal NHS that is sustainable for the long term”. In the report Stevens also warned of a looming £8bn funding shortfall by the end of the next Parliament.

However it has emerged that £700m of the £2bn promised had already been allocated by the Treasury to the Department of Health, made up of ‘back office’ savings and non-NHS budgets.

Of the total £2bn to be invested, £1.5bn will be routed conventionally into CCGs and specialised commissioning allocations, becoming part of general spending.

Around £200m will be spent on health economies which are under extreme pressure financially and clinically, such as Staffordshire. Some of this money could also be pumped into more financially healthy areas already beginning to adopt the new care models detailed the Five Year Forward View.

The remainder will pay for expanded and enhanced primary and out-of-hospital care. This ring-fenced investment will be repeated in each of the five years of the next Parliament – producing a total budget of £1.1bn. It will be funded by fines levied on banks for misconduct in the foreign exchange markets.

Responding to the announcement, Stevens said that services are under pressure and with the economy now growing the health service needs “genuine new investment”.

He added: “That’s the case I’ve been making on behalf of the NHS to government, and today they’ve listened and responded with the funding we need for next year to sustain frontline NHS services and kick-start transformation. Of course there will still be pressures and difficult choices, but the government has played its part and the NHS will step up and play our part too. Today represents an extremely welcome vote-of-confidence in the NHS’ own five year plan.”

The British Medical Association also welcomed news of the funding, calling it an “encouraging step forward”.

“It does appear that politicians of all parties are starting to get the message about the dire state of the NHS finances,” said Dr Mark Porter, chair of the BMA.

He added: “We are particularly pleased that policymakers have listened to the BMA and confirmed that £250m will be allocated annually for the next four years to invest in GP premises and out-of-hospital infrastructure. 

“Many GP facilities have been starved of investment for decades with the result that a number of GP practices are too small and inadequate to cope with the number of patients.”

However, the head of the Institute for Fiscal Studies has warned that protecting the NHS for the next five years would force “staggeringly big” budget cuts elsewhere, with schools, pensions and benefits all in line for “dramatic” reductions in the years ahead if Osborne still plans to balance the budget by 2017-18. Paul Johnson said to the Telegraph: “Essentially, over the next Parliament you’re going to need to see cuts at least at the level that we have seen over this Parliament in order to meet the fiscal objective that they have got.”

This will mean that spending on “unprotected” services — such as local council budgets, the justice system, the environment, and transport – will see “an average cut of over a third in real terms” between 2010 and 2020.

Johnson added that funding for pensions and schools, which so far have been protected, will come under intense pressure in the next Parliament.

(Image: c. PA Wire)

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