Economic turmoil and its impact on health and care

Autumn has been a rollercoaster. The big issue dominating everything is whether the new Prime Minister will have a detailed fiscal plan that can assure the markets of what the former Treasury Permanent Secretary, Lord MacPherson of Ealing, calls #soundmoney. This will affect the cost-of-living, interest rates, pension savings and the housing market, touching most of our lives. Feminists used to say ‘the personal is political’. But at the moment, the political is personal. And that impact extends to health. 

A healthy population is key for a healthy economy

Our health is hugely influenced by the circumstances of our daily lives. At the Health Foundation we’ve been progressively building an evidence hub compiling data and research on what drives health inequalities. Dave Finch wrote an excellent blog earlier this month drawing on that work to outline how the cost-of-living crisis is a health emergency too. As he says, it’s critical that the plan for growth recognises that a healthy population is key for a healthy economy. 

One obvious link between economic and population health is through the workforce. Office of National Statistics data out this month showed that the number of vacancies in the economy now exceeds the number of unemployed. Firms will not be able to expand if they can’t find the workers. A rising number of people who have left the labour market due to ill health is one key factor. 

On 9 November Andy Haldane (the former chief economist at the Bank of England, lead for the last government’s levelling up white paper and now CEO of the Royal Society of Arts) will be giving the annual REAL Challenge lecture, discussing this complex relationship between health and wealth. Register to join the lecture online.

How does this affect the NHS and social care?

The current economic turmoil has implications for the NHS and social care system. The Institute for Fiscal Studies published its green budget on 11 October arguing that stabilising public sector debt as a fraction of national income by 2026/27 (a key test for #soundmoney) would require a fiscal tightening of around £60bn. The Chancellor has announced major changes to the mini-budget tax and energy support proposals reducing that gap. But there is still a gap and he has signalled that further difficult decisions need to be made at the main fiscal event (now planned for 17 November). This would almost certainly include another round of spending cuts at a time when all the pressures are to increase spending. 

The NHS has a funding settlement up to 2024/25. Spending this year is expected to be just over £150bn, rising in cash terms to £162bn in 2024/25. At its Board meeting in October NHS England published its analysis of NHS finances. They argue that the NHS budget is about £6–7bn short of what is needed to maintain services. Pay, inflation, COVID-19 and the care backlog are all factors in the growing gap between the pressures facing the NHS and the resources available. 

NHS funding is not an abstract, theoretical topic. If there aren’t the resources to meet pressures, quality and access will be affected. And all this with the latest national data confirming that we have now reached the grim milestone of 7 million people on the waiting list. 

Winter is coming

The scale and complexity of the challenges facing the NHS in the run-up to winter is highlighted by the latest data on ambulance response times. The challenge with the NHS is that it is an intricate system in which everything is connected. Sitting behind the long ambulance and A&E waiting times are problems with timely discharge of patients from hospital. Social care is one of the services that people require who no longer need hospital care but do need care.  

Skills for Care published its annual report this month showing that not only have vacancies in social care increased but the number of people working in the field has fallen despite rising need. The reasons for this are complex, but one inescapable factor is the low pay rates for care workers. The wages of care workers are falling behind those of other sectors and in a cost-of-living crisis many care workers can’t make ends meet. 

We published new analysis this month on poverty and deprivation among UK residential care workers. With data from 2017 to 2020, so before the current cost-of-living crisis, 1 in 10 residential care workers experienced food insecurity and 1 in 8 children of care workers were materially deprived. It’s deeply sobering to think about how those workers will be affected by inflation. 

Dealing with the pressure

Given the public finance outlook and the legacy of COVID-19, it’s obvious the NHS and social care will be under sustained pressure for the foreseeable future. There will be an absolute premium placed on finding ways to maximise the value of every pound and every hour of staff time.  

For several years we have been investing in research to understand how efficiency can be improved across the health system, and we draw together some of the key learning from that work here. This month we also published a report on developing learning health systems in the UK, which explores some of the actions needed to help us bring about effective change. 

The absence of a plan for how public services will cope with higher immediate costs, and the increased likelihood of cuts over the medium term to balance the public finances, risks a deterioration in population health and further erosion in the quality of and access to health and care. The NHS and social care are under severe pressure but, as David Finch says in his blog, they were never meant to go it alone – a strong welfare state through investment in areas such as housing, social security and education supports good health.

Anita Charlesworth (@AnitaCTHF) is the Director of Research and the REAL Centre at the Health Foundation.
 

This content originally featured in our email newsletter, which explores perspectives and expert opinion on a different health or health care topic each month.