No mention of social care as government confirms £8bn boost to NHS

Treasury statement leaves open possibility that government will increase NHS investment in pooled Better Care Fund

The government today announced that NHS spending would rise by £8bn above inflation by 2020-21 but did not say whether any of this extra funding would go to adult social care.

The announcement, which confirms existing plans, comes a day before chancellor George Osborne sets out the government’s full public spending plans for 2016-17 to 2020-21.

The government said the NHS would receive almost £6bn in additional resources, above inflation, in 2016-17 and an extra £10bn a year by 2020-21. This is when compared with 2014-15 funding levels.

The NHS received a real-terms increase of £2bn in 2015-16, meaning the extra money amounts to almost £4bn extra next year and £8bn by 2020-21. This is in line with what was demanded by NHS England chief executive Simon Stevens through his Five Year Forward View plan to reshape services, including through closer integration with social care.

The extra resources are expected to go only to Stevens’ organisation, which controls the £101bn of the £116bn NHS budget that is spent on commissioning services; this means the government will be able to make cuts to other areas, such as health education and public health.

What the extra money will go on

“This settlement is a clear and highly welcome acceptance of our argument for frontloaded NHS investment,” said Stevens. “It will help stabilise current pressures on hospitals, GPs, and mental health services, and kick start the NHS Five Year Forward View’s fundamental redesign of care.”

The Treasury said the extra money would enable hospitals to offer seven-day-a-week coverage for all key services and enable everyone to access a GP in the evenings and weekends by 2020.

There will also be investment in cancer diagnostics, new hospitals and “better out of hospital services that will see more people treated closer to home, give patients greater control over their own care, and help prevent people getting seriously ill in the first place”.

It is not clear whether the latter point will lead to the government requiring NHS England to pour more money into social care than it currently already does.

NHS transfers to social care

Transfers of NHS funding to councils have been used since 2011-12 to offset the impact on adult social care of substantial cuts in government funding to local authorities.

As of 2015-16 this has been done through the Better Care Fund, under which NHS England is mandated to ensure local clinical commissioning groups (CCGs) invest a specific amount in pooled budgets with local authorities.

In 2015-16, this sum was £3.46bn, which was topped up with £340m in government grants to local authorities and £1.5bn in voluntary contributions by CCGs and local authorities.

The BCF’s key purposes are to help shift care out of hospitals into community-based and integrating care, though one of its other objectives is to help safeguard social care services. An estimated £2bn of the 2015-16 total – £5.3bn – was due to be spent on adult social care in 2015-16, with most of the rest going on different types of health service.

Tough settlement for local government 

With councils expected to receive another tough funding settlement from government tomorrow, additional mandated funding for the BCF was seen as one way that adult social care could be safeguarded from cuts.

However, this has been resisted by NHS leaders who believe the full additional £8bn is needed to deal with the additional pressures facing the health service over the coming years, and that social care should be protected through other means.

Now it is expected that Osborne will allow local authorities to raise council tax by an additional 2% with the money raised spent only on adult social care.

Currently, councils wanting to raise the tax by over 2% must sanction such a rise through a referendum of the local population. But the planned increase for adult social care is believed to be over and above this basic increase in council tax and would not require a referendum.

However, it is not clear whether councils would be able to raise the additional 2% in each year of the spending review or how much it would raise for them. It is also likely to disadvantage poorer areas that are less able to raise money through council tax. This could be exacerbated by a separate reform in which councils would no longer give half of their business rate receipts to the Treasury, which then hands back most of this money back to authorities in a needs-based grant. Instead councils will retain all business rates receipts, a situation which would be likely to favour wealthier over poorer areas.

Funding pressures 

Adult social care is facing substantial funding pressures, which have been set out by the Local Government Association and the Association of Directors of Adult Social Services in their spending review submission.

These include:

  • the introduction of the national living wage from next April, which the LGA says will cost councils an extra £1bn per year by 2020.
  • inflation and demographic pressures which, combined with the living wage, will add £2.1bn to councils’ annual costs for social care.
  • the additional £172m a year needed by councils to meet the costs of complying with the landmark ‘Cheshire West’ Supreme Court ruling.

Read Community Care’s analysis on what the spending review means for social care


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