Budget analysis: “whatever it costs” for COVID-19, little clarity on anything else

Budget analysis: “whatever it costs” for COVID-19, little clarity on anything else

The first Budget to be delivered by new chancellor Rishi Sunak was dominated by measures to address the health and financial threat posed by the novel coronavirus, COVID-19. Action on the underlying problems facing the NHS were, once again, put off. While two big health tech announcements were made outside the Budget process. Lyn Whitfield reports.

This was always going to be the coronavirus budget, and new Chancellor Rishi Sunak addressed that head-on. “I want to get straight to the issue on most people’s minds, COVID-19” he told the Commons on Wednesday.

“People want to know what is happening and what can be done, and I want to assure them that we are doing everything we can to keep our country healthy and financially secure.” Judging by the scale of the measures he unveiled, he is expecting that to be quite the challenge.

Sunak said “up to a fifth of the workforce” could be off sick “at any one time” as the virus hits, and that this will impact on supply lines and consumer confidence. The impact, he said would be “significant” but “temporary”; so the government’s job is to step into the gap.

Putting the economy on life-support

First, by making sure that public services are ready. Sunak’s headline-ready promise was to support the NHS “whatever it costs”; but an official Treasury briefing paper says the health service will be able to draw on a £5 billion fund that will also be available to local councils “to support social care services and vulnerable people.”

Second, by supporting people affected by COVID-19 or, as he put it, to “make sure there is a safety net that people can fall back on.” Sunak unveiled a big extension of sick pay and a relaxation of some benefits requirements, as well as a £500 million hardship fund for use by local authorities.

Third, by supporting business, so there are jobs for people to return to. Sunak announced £7 billion of tax reliefs, loans, and direct support, including a scheme to allow some SMEs to reclaim sick pay for their employees. And fourth, more traditional measures to prop-up the economy. In the form of an eye-popping £30 billion of fiscal stimulus.

‘Staring from a deep hole’

Think-tanks welcomed the “whatever it takes” pledge on the NHS; but pointed out that the health service is hardly in peak condition for the task ahead.

Nuffield Trust chief economist John Appleby said the £5 billion emergency fund “will help the health service and social care to take immediate, urgent measures like buying protective equipment, covering overtime, and bringing in the private sector.”

But, he added: “Staff and space are the resources that will be really needed, and the NHS starts in a deep hole after a decade of underfunding and understaffing.”

Ahead of the Budget, the British Medical Association renewed its call to return annual, real-terms increases in health spending to their long-term trend of 3-4%, and to put £3 billion into capital and £1 billion into public health. This did not happen. 

Leaves for autumn

Indeed, with coronavirus consuming so much headroom, many of the issues that are traditionally dealt with in the Budget were put off to the autumn. Sunak said there would be a review of the fiscal rules that govern the timescale over which the government seeks to balance the budget.

So, while he announced a number of road, rail and building projects – which look set to be funded from significantly increased borrowing – he not only failed to inject more capital into the NHS but to make any capital allocations for the public sector.

This impacts on health tech, because hospital building, equipment and IT projects tend to have a big capital component; and as things stand, the NHS has no capital budget beyond the end of the current financial year.

Meantime, outside the Budget process, health and social care secretary Matt Hancock kicked the social care can further down the road, by calling for cross-party talks on the issue.

Former chancellor Philip Hammond promised a social care green paper “by the end of 2017” in the last, full Budget to be held before this one; but Hancock is only proposing “structured talks” starting in May this year.

John Appleby sounded angry but resigned to this. “We are about to rely on these threadbare services to keep thousands of vulnerable patients out of hospital – and yet we will not give them the funding and reform they have needed for years,” he said. “Coronavirus may serve as a reminder that inaction has consequences.”

NHS funding

Budget20 didn’t need to address NHS revenue funding, because this was decided two years ago, when former prime minister Theresa May announced a real-terms, £20.5 billion a year-increase for the NHS in England by 2023, to mark NHS70 [Highland Marketing analysis].

This was confirmed by Philip Hammond in his 2017 budget [Highland Marketing analysis] and is, in theory, being enshrined in law by the NHS Long Term Plan Funding Bill. Although, during the general election campaign, the Conservative Party subtly changed the promise to ‘an extra £34 billion’ for the NHS.

This is what each year’s NHS70 increase adds up to in cash terms; without protecting it against inflation. Also, when he mentioned the sum in his Budget anyway, Sunak indicated that it would go in over the five-year term of this Parliament; which is a longer timeframe than May implied.

The Chancellor made two further references to NHS spending. First, he said that a combination of an increase to the migrant ‘healthcare surcharge’ and a clamp-down on tax avoidance will be used to pay for better mental health services for veterans and a resolution of the doctors’ pension dispute.

Second, he said that £6 billion of “new” funding will go on the Conservative party’s NHS manifesto’s commitments; 50,000 more nurses, 50 million extra GP appointments, and what Sunak described as “work starting” on 40 new hospitals.

Despite its billing, this does not appear to be “new” money, so much as a rebadging of previously announced cash. Siva Anandaciva, chief analyst at the King’s Fund, said it would have been nice to have detail on where the money will go.

“Chronic workforce shortages remain the single, biggest issue currently facing the NHS and social care,” he said. “The publication of a long-term, comprehensive NHS People Plan has been repeatedly delayed and held back to allow for today’s Budget commitments, so it is now essential to get this published as soon as possible.”  

Noises off: remote consultations

While Sunak started and ended his hour-long speech with references to the NHS and COVID-19, he didn’t make any specific announcements on how the health service should respond.

The Department of Health and Social Care issued its own plan on 3 March, to “delay and flatten” the impact of the epidemic by encouraging people to take measures to avoid or put off getting sick and then to stay at home when possible, to reserve scarce hospital beds for those who really need them.

At Digital Health Rewired, chief executive Sarah Wilkinson said NHS Digital was doing its bit by ramping up its NHS 111 and NHS 111 Online services to provide people with advice, while working out how to make the NHS Summary Care Record available to clinicians working in emergency care settings.

At the same event, NHSX chief executive Matthew Gould said it was looking at how data could help to predict the course of the pandemic and at ramping up capacity for remote consultations [Highland Marketing coverage]. A couple of days later, Matt Hancock urged GP practices to move to a ‘digital first’ approach for all appointments.

But doctors pointed out that there are challenges to doing this: practices may not have the right kit, might be unclear about the medical negligence and regulatory implications, or might not be funded to do it. The emergency fund could, presumably, be used for kit. The other issues need action from the NHS’ management, regulatory and digital bodies.

The digital aspirant programme

NHSX did make one, positive announcement this week. Twenty-three trusts are to be part of the first wave of the promised ‘digital aspirant’ programme, digitalhealth.net and the Health Service Journal reported.

They will receive £28 million of central money; but no information was immediately forthcoming on where this money has come from, how the trusts were chosen, or what they will do with the cash. The money, presumably, is left over from Jeremy Hunt’s time as health and social care secretary.

Having made the “paperless 2020 pledge”, launched the tech funds, and then instigated the Wachter Review and global digital exemplar programme, Hunt secured a pot of money for technology in Hammond’s 2017 Budget; and there has been considerable speculation about where it has gone [Highland Marketing analysis].

As to what it will be spent on: the presumption has to be that trusts will have put in bids for funding for specific projects. A number of the acute trusts are known to want, or to be procuring, electronic patient record systems, while others have limited EPRs and might be looking to roll-out specific functionality, such as e-prescribing.

As such the programme looks a lot more like another round of the tech fund than an extension of the GDE programme. But, for the moment, it’s too small to have much impact on the market. As with so many aspects of NHS and health tech policy and spending, more details are promised later in the year.

Crisis, what crisis?

Putting aside the “whatever it costs” pledge to help the NHS through the coronavirus crisis, this year’s Budget effectively means “no change” for the NHS or social care.

Revenue spending has already been set and this year’s operational planning and contracting guidance determined how it will be used to fund trusts, support the improvements set out in the NHS Long Term Plan, and further its underlying agenda to integrate services and move forward with population health management.

The lack of matching people and capital programmes is getting to be a real issue, but not one that will be addressed before an autumn statement. The lack of action on social care is an even bigger issue, but not one that looks set to be addressed that quickly.

Health tech vendors may find themselves addressing COVID-19. Some have already flagged action they are taking to monitor the spread of the disease, increase capacity for remote consultations, or support testing and care.

But in the longer-term, the drivers of NHS investment are likely to remain: tackling neglected infrastructure; using software to improve efficiency in clinical care; moving to integrated care models and implementing population health management to tackle demand. All of which are big challenges, that coronavirus is only going to make acute.

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