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NHS Confederation: Government must ring fence expenditure on health and social care

A letter to George Osborne, Chancellor of the Exchequer, from Stephen Dorrell, the Chair of the NHS Confederation:

Dear Chancellor,

As you may know, I recently took over as Chair of the NHS Confederation. I write in that capacity as the Government makes its final decisions about the shape of the Comprehensive Spending Review.

My purpose is not to present an argument about the level of spending on the NHS. The Government made a welcome commitment in the General Election campaign to raise the NHS Budget by £8 billion over the lifetime of this Parliament. It is always possible to argue the case for higher spending, but this letter is focussed on the need to ensure that taxpayer resources committed to the whole health and care sector are used efficiently.

If that objective is to be met, the first requirement is to recognise the need to treat health and social care as a single sector. At a policy level this proposition is not controversial; the Health and Social Act established Health and Wellbeing Boards with precisely this objective; the Better Care Fund was an attempt to encourage more integrated behaviour; Simon Stevens’ Five year forward view for the NHS is based on the assumption of sustained social care services and Jeremy Hunt speaks often of the need for more integrated health and social services.

The challenge is to make finance reflect policy. In recent years, we have seen NHS budgets rise and social care budgets fall. This cannot continue.

Put crudely, increasing NHS spending by £8 billion and reducing social care spending by £2 billion means the resources available to the health and care sector, seen as a whole, increase by just £6 billion. This approach guarantees that the increased resources are used less efficiently than they should be, because reduced social care support leads to avoidable illness and increased demand; that is bad economics, but more importantly, it is bad social policy.

In making your final decisions, I would therefore urge the Government to use the Spending Review to put in place a financial framework for the health and care sector as a whole which reflects your policy commitment to support the Stevens Plan and, with it, the development of a more integrated health and social care sector.

Several steps are necessary to realise this objective:

1. First I urge you to make a critical leap of logic. The Government is committed to the principle of an integrated health and social care sector, and it is committed to protect public spending on these services. The beginning of this Parliament is the right time to follow the logic to its conclusion and create a ring fence around public expenditure on health and social care as a coordinated activity. This is backed by 86% of our members.

2. Within that ring fence the Government needs to establish a clear year by year spending framework through this Parliament for the health and social care sector as a whole. This needs to cover both the £8 billion for the NHS and the plans for social care budgets, which must be at a level to support the Stevens Plan. Changing the shape of health and care services to reflect changes in demand and technology is always sensitive but always necessary. A clear medium term spending framework will be very well received and encourage commissioners and providers to work together to plan for and deliver necessary and sustainable service change.

3. Within the medium term framework I urge the Government to make provision for a transformation fund. History is replete with examples of spending increases which postpone necessary change rather than facilitate it; the Government’s welcome support for the Stevens Plan needs to include front-loaded resources for his proposal to create a fund to support service transformation. Failure to do so will guarantee continuing service inefficiency – and with it avoidable illness and service pressures.

4. Budgets for workforce, training and research are not desirable extras; they are allocated to front line organisations to support service delivery and transformation. I understand that your officials have asked for options to be reviewed to reduce some of these budgets. I emphasise that these reductions would hit front line services directly and would undermine the capacity of the sector to deliver the service change which is required.

5. Finally, although public health sits without any ring fence of health and care services, I urge the Government to stress the importance of public health within the balance of local government expenditure. The function of public health was transferred to local government in order to empower local authorities to play a fuller role in shaping local communities; it remains as important to good local government as the Department of Health and Public Health England are to good national government, and the Government needs to find ways to demonstrate that it understands that.

The radical upgrade in prevention set out in the Stevens Plan cannot be achieved against the background of falling public health budgets.

In conclusion, I stress that I recognise that none of this is easy – and, in particular, that our advocacy of a more integrated view of health and care services creates issues both for local government and for the NHS. I strongly believe, however, that the right approach is to focus on the requirement to reshape service delivery and regard the institutional consequences of those changes as important but secondary concerns.

I believe that this approach commands widespread support within and beyond the sector and that it makes both economic and social policy sense; the immediate challenge for the Government is to use the Spending Review to create a financial framework which reflects this approach.

Yours sincerely

Stephen Dorrell

Chair, NHS Confederation

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