How NHS England justifies its claim of a ‘real terms’ rise in mental health spending

Last week NHS England told us spending on mental health 'is now going up in real terms'. We asked for the evidence. Here's what we were told.

“Spending on mental health is now going up in real terms after years when services were under real pressure”. This is how NHS England responded to last week’s investigation by Community Care and BBC News that showed how at least eight deaths had been linked to mental health bed shortages.

The statement was attributed to Dr Martin McShane, NHS England’s director for people with long-term conditions. It was met with surprise by some in the mental health sector. With services seemingly under severe strain, a ‘real terms’ increase (a spending boost above inflation) in funding this year would be welcome news, particularly given separate investigations by Community Care and BBC News and the Health Service Journal found mental health trusts had their budgets cut by 2.3% in real-terms between 2011-12 and 2013-14.

But how does the claim stand up to scrutiny? We asked NHS England for the evidence to support its statement. Here is what we were told and some context (you can also download the report we were eventually sent giving full details).

How NHS England’s first analysis forecasts a real terms cut

NHS England initially pointed us to figures showing that overall mental health spending was forecasted to rise from £8.5bn in 2013-14 to £8.62bn in 2014-15 (see table below). That £120m increase would equate to a 1.4% increase in cash terms.

We have calculated the predicted ‘real terms’ change based on the 2.2% rise that the government’s GDP deflator forecasts will be needed in 2014-15 to protect budgets from inflation. If the forecasts prove accurate, this first set of figures would actually amount to a 0.8% cut in overall spending on services when adjusted for inflation. It should also be noted that an NHS England board paper, published in December 2013, estimated a 2.1% uplift in spending would be required to give “real terms protection” to budgets. Even using this measure the figures provided here would still amount to a real-terms cut.

The table below includes spending by local NHS clinical commissioning groups. These groups will commission mainstream mental health services – including community care and crisis care – from NHS mental health trusts. It also includes spending on services that are directly commissioned by NHS England. Directly commissioned services include specialist eating disorder units, forensic inpatient care and inpatient children’s services.

Source: NHS England briefing paper (real-terms calculation added by Community Care)

Source: NHS England briefing paper (real-terms calculation added by Community Care)

How NHS England’s second analysis forecasts a real terms rise

When we sent our ‘real-terms’ calculations above to NHS England, they told us that those figures had actually been superseded by a second analysis the organisation had conducted of forecasted mental health spending.

This second analysis tried to capture all mental health spending. It requested that clinical commissioning groups revise how they identified ‘mental health’ spending so that the figures included outlay on children’s substance misuse services and dementia care. They also broadened the services included in the spending estimate to try and capture spend on mental health by acute hospitals and community trusts.

This second analysis showed the following:

Source: NHS England briefing paper (real-terms calculation added by Community Care)

Source: NHS England briefing paper (real-terms calculation added by Community Care)

So, according to the second analysis, overall spending is forecasted to rise by 0.5% in real-terms in 2014-15. However, the figures show that this is driven purely by a significant increase in forecasted outlay on the specialist services directly commissioned by NHS England. Spending by clinical commissioning groups is still forecast to fall behind inflation.


The figures provided raise questions about why NHS England claimed ‘real terms’ spending is rising in response to our story last week.

Firstly, our story was focused on adult mental health crisis care services. These are commissioned by local clinical commissioning groups and both NHS England analyses above suggest spending by those groups is forecast to actually fall in ‘real terms’. The second issue is that these are forecasts for spending. Planned expenditure may not become reality, so we can say spending is ‘forecast’ to rise but, at least on the evidence above, not that spending ‘is going up’ in real terms. Actual expenditure will not be known until the end of the financial year.

The third issue is whether an increase in spending on centrally commissioned services is, in itself, a good thing. Sources in the mental health sector say that the rising outlay on these services – tier 4 CAMHS, forensic inpatient units etc – could actually point to problems with a lack of resource going into the community services funded by local commissioners (ie the funding at local level that both analyses appear to predict is not keeping up with inflation).

What do you think? Are the spending forecasts a positive sign or not? Either way it is critical that we have an accurate and transparent benchmark at national level of how much is going into mental health services, particularly given that the government scrapped its annual survey of mental health spending in 2013.

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