What does all the recent turmoil mean for the current status and future prospects of the health service?

The last 6 months have been exceptionally turbulent. We’ve seen economic turmoil, the sacking and resignation of the chancellor and the prime minister, unprecedented winter pressures in the NHS and public sector strikes. A tornado has whirled through public life. But does spring bring signs that the turbulence is subsiding? And where does that leave the health service? 

March’s Office of Budget Responsibility (OBR) forecast provides some grounds for optimism: it expects the UK to avoid a recession and the rate of inflation to fall sharply. But the underlying fundamentals remain extremely challenging. Real household disposable incomes will be no higher in 2027 than they were in 2019, and public sector debt is barely falling – fundamentally the result of low productivity and low economic growth. Sluggish economic growth is at the heart of so many of our problems: growth over this parliament is expected to average just 0.5% a year.  

For the NHS, this means that money is firmly back on the list of things that keep system leaders awake at night. We recently published a new set of charts answering three key questions about health service funding: how much is the NHS getting, how does it compare to funding in the past and – critically – is it enough to meet the pressures facing health services? The picture is sobering. Total health care funding in England in 2023/24 is falling in real terms, and over the rest of the parliament it will increase by an average of less than 1% a year in real terms – less than a third of the historic average rate of funding growth (3.9%). Look out for a sister set of charts about social care funding soon. 

The suspension of NHS workers’ industrial action, so that Agenda for Change union members can vote on a revised pay offer from the government, is another welcome move towards less stormy times. However, as ever the devil is in the detail. There are still lots of questions about the long-term direction of pay, and the pay offer risks compounding workforce problems in social care (as we explained in a recent comment piece). The links between the NHS and the wider labour market are really important, but too often are not considered in NHS workforce policy. Our analysis of staff moving between social care and the NHS and the links between the wider labour market and the NHS nurse workforce shines a light on just how important these flows are.  

The NHS pay offer may also exacerbate short-term funding pressures for providers and integrated care systems. The pay offer adds at least £1bn to NHS funding needs in 2023/24, over and above what was previously budgeted, and the signs are that the Treasury is playing hard ball, resisting calls to dip into their contingency fund to meet the extra cost.  

The issues raised by the government’s revised pay offer only serve to illustrate why the NHS desperately needs a long-term workforce plan. Expectations are that this will be published sometime after Easter. We have argued that the workforce plan needs to be underpinned by independently verified long-term projections of demand and supply, and we were one of the organisations that pushed for legislation requiring this. That legislation was championed by Jeremy Hunt as chair of the Health and Social Care Select Committee, and in the autumn as chancellor he committed to a process of verification for the workforce plan. In February the REAL Centre worked with NHS England to undertake a short assessment of the projections approach. We will publish our assessment and a short blog explaining how we went about this once the workforce plan is released. This isn’t the formal verification (the government will need to commission that), but hopefully a useful contribution exploring some of the aspects that verification will cover in more detail. 

Workforce is one of the key drivers of quality and efficiency in health care, but it’s not the only one. Innovation is also important. How to balance affordability and innovation is a challenge most health systems are wrestling with – it is a complex area. We have worked with the London School of Economics and Political Science to map this terrain and to help people understand some of the issues and the way the market currently operates. 

This year is the 75th anniversary of the founding of the NHS. Recent polling from Ipsos, commissioned by the Health Foundation, echoes the findings of the British Social Attitudes Survey; satisfaction with NHS care is at a record low. While commitment to the founding principles of the NHS remains rock solid, the public is deeply concerned about its future and almost half are not confident that current policy will deliver a comprehensive health service available to everyone in 5 years’ time. 

While we have hopefully passed the high tide of turmoil in the health service, the underlying challenges are still immense. At the REAL Centre we are committed to building the evidence that will help policymakers grapple with those long-term, systemic issues. We are therefore thrilled to have awarded long-term funding to teams led by Professor Nils Gutacker at the University of York and Professor Philip Clarke at the University of Oxford to develop two new research units exploring the economics of supply and demand for health and social care. More updates will be shared in our REAL Centre emails.