Health and social care funding: policy solutions to the health and social care funding crisis

Executive Summary

There is a growing consensus about the need for more funding for the English health and social care system. The Chief Executive of NHS England, Simon Stevens, has said that waiting lists for hospital operations could hit 5 million unless the NHS receives a minimum of £4bn more in 2018-19. A number of MPs have publicly calling for increases to NHS funding. This includes Conservative MP, Sarah Wollaston, Chair of the influential Health Select Committee. Expert health think tanks The King’s Fund, Nuffield Trust and Health Foundation have argued that demand is outstripping funding too and that the NHS needs a £4bn funding boost next year.

The past few months have seen this concern grow as winter approaches. The decisions made in the November Budget come after a well-publicised winter crisis in the NHS in 2016-17. Last year, NHS trusts in England posted a financial deficit of £770m – more than the £580m maximum target deficit for the financial year. The decisions also follow the controversial Capped Expenditure Process (CEP) and the continuation of Sustainability and Transformation (STPs) and their raft of potential service changes and consolidations. STPs mark the first time in the history of the health service that major change is being asked during a sustained financial squeeze.

The scale of the funding needed to achieve a sustainable health and social care service is large. One recent estimate found that the Government would have to increase health funding by £21bn a year by 2020/21 to meet the OECD (excluding America) average, or by £43bn a year to meet the average of similar European countries. The £4bn funding increase called for by Simon Stevens, Sarah Wollaston and expert think tanks is the absolute minimum the NHS needs.

This paper summarises a number of policy solutions and funding options available to Philip Hammond and Theresa May to increase the budget for health and social care. It does not discuss solutions that would directly involve increasing Government borrowing because this seems an unlikely prospect in the current political climate. However, the policy solutions discussed in this paper challenge three other assumptions made by the Government:

1) There is no possibility of reallocating current Government funding to increase the budget available to health and social care
2) The existing ‘envelope’ of funding is unchanging and unaffected by political decisions
3) There is no possibility or public appetite for increases in taxation to pay for health and social care

In other words, although the Government may not currently have the political will to enact them, there are realistic options available to increase funding to health and social care without increasing the deficit.

You can read the full report here.