Where does the 2019 spending round leave health and social care? – the health foundation

While the Chancellor said that this year’s Spending Round has ‘turned the page on austerity,’ the Health Foundation’s Ben Gershlick and David Finch explain that major challenges remain for health, social care and the wider public services that drive health outcomes.

The Chancellor stated that the 2019 Spending Round ‘turned the page on austerity’, with an overall, real-terms increase in departmental spending of 4.1%. But with investment in the services and infrastructure needed for people to lead healthy lives at rock bottom, the question is whether the new spending is enough – and in the right places.

Some of the larger increases in spending fall to services that manage acute societal needs, however those that create the long-term conditions that keep people healthy – the wider determinants of health – have fared less well. As Resolution Foundation analysis has shown, the 2019 Spending Round has reversed only a third of the real-terms, per-head cuts in day-to-day spending since 2010. And those cuts have not been evenly distributed.

While health care has been protected since 2010, other areas that are important for maintaining and improving health have been cut significantly, and despite the real term increases announced in the Chancellor’s Spending Round, still face overall reductions over the period. Next year, local government allocations (on a real-terms per capita basis) will still be 77% lower than in 2009/10, housing and communities spend 52% lower and education spend down by 11%.

The NHS has been a relative winner in public spending over the last decade, although funding growth has been at a much lower rate than demand and cost pressures. But governments have chosen to prioritise health spending on front-line services over investment in key but less visible spending, such as training and developing the NHS workforce, on buildings, equipment and technology and crucially on support for services such as smoking cessation which keep people healthy.

Health spending pressures are rising in part due to the ageing of the population. This results in similar, if not greater, pressures on adult social care. But while the health budget grew over the decade, adult social care spending fell.

So: is the new spending enough – and is it in the right places to create the long-term conditions that keep people healthy? We have looked at the key areas.

First, many of the larger increases fall to departments that manage the symptoms of acute societal needs: social care, policing, and criminal justice. There was also some welcome signs of support for the wider determinants of health, including real-terms boosts to education and homelessness reduction. However, there is a real risk that the additional spend in 2020/21 simply papers over the cracks by dealing with crises rather than providing the long-term investment needed for sustained improvements to our living standards and health. Beyond departmental spend the Chancellor’s announcement doesn’t provide any additional funding for working-age social security, where austerity continues, with child poverty rates expected to rise further.

Second, there was a small real-terms increase in the public health grant. It will end five years of real term cuts that had reduced the grant by a fifth, but it will do nothing to restore the £1bn required to reverse them. It fails to match the rate of increase in budget for NHS front-line services and so will still represent a shrinking share of overall health spend. This is despite evidence that further public health spending is three times more productive than spending on health services.

Third, the extra money announced by the Chancellor for adult social care could amount to an additional £1bn spending for adult social care, depending on decisions made locally. This is welcome, but broadly only keeps pace with rising demand, with no respite for the many thousands of people living with unmet social care needs. And around a half needs to be raised by council tax – a difficult prospect in areas of the greatest deprivation where need is highest but revenue raising capacity can be limited.

Fourth, the overall day-to-day budget for the Department of Health and Social Care will rise by 3.1%, while its total budget (including capital spending) will rise by 2.9%. This 2.9% growth is below the 3.3% the Health Foundation and the Institute for Fiscal Studies estimate is needed just to maintain current standards of care, with a growing and ageing population and a rising burden of chronic disease. And it is some way short of the 4.1% growth required to invest in improvements in the health service. While it is positive to see a shift in spending towards wider public sector priorities, it is important to see a greater emphasis on investing in long-term measures designed to prevent poor health.

The 2019 Spending Round marks the end to cuts to many public services, but undoing the impact of nine years of austerity will take more than one year of increased spending. Major challenges remain for health, social care and the wider public services that drive health outcomes and inequality.

Further information:

Public Sector Focus