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The scale of the funding challenge in health is colossal and whilst spending on health is increasing, the service is under unprecedented strain and struggling to keep pace with relentlessly rising demand, says the Health Committee in its report on Impact of the Spending Review on health and social care.

• Read the report summary
• Read the report conclusions and recommendations
• Read the full report: Impact of the Spending Review on health and social care

NHS England's budget

Last year's Spending Review announced that the NHS would receive an additional £8.4 billion above inflation by 2020-21. But whilst previous spending reviews define health spending as the whole of the Department of Health's budget, the 2015 Spending review defines it in terms of NHS England's budget, which excludes, for example, spending on public health, education and training. Using the original definitions, and taking 2015-16 as the base year, total health spending will increase by £4.5 billion in real terms by 2021.

Chair's comments

Committee Chair Dr Sarah Wollaston MP said:

"Whilst the NHS has been treated favourably compared to many other departments, the increase in health funding is less than was promised if assessed by the usual definitions.

Funding cuts to public health will make it more difficult to address the challenge set out by the Prime Minister to reduce health inequality. 

The cuts to public health undermine the radical upgrade to prevention that is needed to keep people healthy, reduce the gap in life expectancy and years lived in poor health for the most disadvantaged, and reduce demand on the health service. Cutting public health is a false economy, creating avoidable additional costs in the future. 

Cuts to health education

Similarly, the cuts to health education come at a time when the workforce shortfall is already placing a significant strain on services and driving higher agency costs. Training and developing the current and future NHS workforce must be a key priority for the NHS and we are deeply concerned about the effect of cuts to training budgets. 

We welcomed the upfront funding which was designed to pump prime the transformation of services. But sustainability and transformation funds are being used almost entirely to plug provider deficits, rather than to resource essential changes to the health and social care system at scale and pace.

Short-term measures are being used to deal with the worsening financial situation. Capital budgets have been raided to meet current spending and trusts encouraged to 'review their accounting estimates for savings'. We are concerned that these measures are masking the true scale of the underlying financial problems facing the NHS."

Social care funding

The Committee also examined the likely impact of the spending review on social care services and the government’s commitment to achieve parity of esteem for mental health. Dr Wollaston said: 

"Historical cuts to social care funding have now exhausted the opportunities for significant further efficiencies in this area. Increasing numbers of people with genuine social care needs are no longer receiving the care they need because of a lack of funding. This not only causes considerable distress to these individuals and their families but results in additional costs to the NHS. We are concerned about the effect of additional funding streams for social care not arriving until later in the Parliament.

We welcome the plans for additional funding for mental health but there is a danger that this could get sucked into deficits in the acute sector particularly as there is a lack of accurate data on mental health spending. We expect to see clear, verifiable evidence that the additional funding promised for mental health is being delivered to the front line if we are to make progress towards parity of esteem."

Further information

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