NHS needs bigger budget rises to ward off ‘perfect storm’, says watchdog

http://www.theguardian.com/society/2014/oct/20/nhs-needs-bigger-budget-rises-says-monitor

Version 0 of 1.

The NHS must once again start receiving annual multimillion-pound increases in its budget to help it survive a “perfect storm” of pressures, the boss of the service’s economic regulator has warned.

The health service will struggle to cope with the ageing and growing population unless it goes back to getting above-inflation annual boosts to its funding, said Dr David Bennett.

In an interview with the Guardian, the chief executive of Monitor said the coalition’s policy of giving the NHS “flat-real” budget increases was no longer enough to ensure the service could respond to the growing demand for healthcare.

His intervention comes days before Simon Stevens, the chief executive of NHS England, unveils a blueprint for what whoever wins the general election in May should do to help the service. It is expected to make clear that the NHS will need billions of pounds of extra investment every year between 2015 and 2020 to help it radically change how it operates.

“We’re not going to be able to continue to run with simple, flat-real funding into the indefinite future,” said Bennett, who helped Stevens draw up the NHS Five Year Forward View. “At some point we are going to have to recognise the impact of things like population growth.” The costs associated with ageing, patients’ growing expectations of high-quality treatment and the need to provide good care in every hospital also help explain why the NHS needs to return to real-terms increases in funding, which was the policy of the Tony Blair and Gordon Brown Labour governments.

Bennett is also calling for the next government to inject at least a further £1bn a year into the NHS in the form of a “change fund” so it can continue funding hospitals, which are under unprecedented pressure, while also building up an array of new services outside hospitals.

Bennett, who was head of the policy directorate and strategy unit in Downing Street under Blair, said the NHS needed to provide far more care in community settings and centralise some hospital services, including A&E and maternity care, as part of a dramatic shakeup to improve care and bring down its costs.

Ministers and the NHS would have to head off opposition from people concerned at their local hospital potentially being downgraded, while hospital doctors would need to be persuaded of the need to start seeing patients in their own homes and community clinics, he said.

If ministers in the administration from next May found the money to underwrite both the “change fund” and year-on-year real-terms increases, “that would be the ideal approach”, he said.

Bennett’s calls go further than what any of the three main political parties have recently pledged. The Conservatives have pledged to maintain the ringfence around NHS funding, which during the coalition’s time in office has seen its budget grow by about 0.1% a year in real terms each year. As a result the Department of Health’s (DH) budget is due to rise by just over £2bn to £115.1bn in April from £113bn now.

Labour intends to maintain the ringfence while also giving the NHS an extra £2.5bn a year to hire tens of thousands of new staff, but that money will not become fully available until midway through the next parliament as it would come from a mansion tax, tobacco firm levy and closing of tax loopholes.

The Liberal Democrats have promised to continue the ringfence and give the service an additional £1bn a year from 2016.

Bennett’s comments come as the DH said the NHS was on course to overspend its budget by up to £550m this year. Growing numbers of hospitals and GP-led local clinical commissioning groups are getting into financial trouble, the Commons public accounts committee heard.

Anita Charlesworth, chief economist of the Health Foundation, backed Bennett’s comments and warned that without substantial extra funding the NHS would have to cut back its range of services.

“The NHS couldn’t meet people’s needs and expectations within a continued flat-real funding envelope. Either what the service offers to patients would have to change or additional funding would need to be found,” she said.

Professor John Appleby, her counterpart at the King’s Fund, said: “The NHS requires real-terms funding increases of around £4bn a year to maintain quality and meet demand, with at least another £1bn a year needed for a transformation fund to meet the costs of essential changes to services.

“While there is scope to improve productivity, unless this funding is found, patients will bear the cost as staff numbers are cut, waiting times rise and quality of care deteriorates.”

While the three parties had recently made “significant funding commitments” on the NHS, “none of them have yet addressed the scale of the financial challenge facing the NHS,” he added.

The Department of Health said: “The NHS is already changing to meet the needs of an ageing population, and we’ve taken tough decisions to increase the NHS budget by £12.7bn over this parliament and put doctors and nurses in charge of decisions about local services.

“Delivering high quality services and balancing the books must go hand in hand, and we expect trusts to show tight financial grip and ensure they live within their means,” a spokeswoman added.