The Spending Review: What does it mean for health and social care A joint briefing from the Health Foundation, The King's Fund and the Nuffield Trust
December 2015
About 1 mins to read
Key points
- Total health spending in England will rise by £4.5 billion in real terms between 2015/16 and 2020/21. This will result in an increase of 0.9% a year, almost identical to the rate of increase over the last parliament.
- This is much less than expected, because the Spending Review defined ‘NHS’ spending as NHS England’s budget, not the whole of the Department of Health’s budget – the definition used by previous governments.
- While NHS England’s budget will rise by £7.6 billion in real terms over the period, other health spending will fall by more than £3 billion, a 20% cut.
- The additional investment will be front-loaded with a significant increase in 2016/17 which is very welcome. However, much of this money will be absorbed by dealing with deficits among NHS providers and by additional pension costs. With much smaller increases in later years, the NHS will struggle to maintain services, let alone invest in new models of care and implement 7-day services.
- Public health spending will fall by at least £600 million in real terms by 2020/21, on top of £200 million already cut from this year’s budget.
- Overall, the NHS is halfway through the most austere decade in its history. Public spending on health in the United Kingdom as a proportion of GDP is projected to fall to 6.7% by 2020/21, leaving us behind many other advanced nations on this measure of spending.
- New powers to raise Council Tax by up to 2% to spend on social care are unlikely to raise as much as the government suggests and could disadvantage deprived areas with low tax bases.
- The additional funding will not be enough to close the social care funding gap which we estimate will be somewhere between £2 billion and £2.7 billion in 2019/20.
- Social care also faces additional cost pressures from implementing the National Living Wage which will add another £800 million to these estimates, leaving an estimated total funding gap of £2.8bn to £3.5bn by the end of the parliament.
- Public spending on social care as a proportion of GDP will fall back to around 0.9% by 2019/20, despite the ageing population and rising demand for services.
This joint briefing from the Health Foundation, The King's Fund and the Nuffield Trust provides an independent assessment of where the Spending Review leaves the NHS and social care.
Now that the dust has settled on the Chancellor's announcements, our three organisations have come together to help ensure the debate is informed by a clear and objective analysis of the funding position and its implications for health and social care services.
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