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Spending Review 2020
Priorities for the NHS, social care and the nation’s health
24 November 2020
www.health.org.uk/publications/long-reads/spending-review-2020
Introduction
On 21 October 2020, the government announced it was abandoning plans to conduct a multi-year Spending Review in favour of a 1-year review to set budgets for government departments for 2021/22 only. The rationale for this shift was the continuing uncertainty created by the pandemic. The Chancellor stated that the Spending Review will ‘focus entirely on fighting COVID-19 and supporting jobs’, with multi-year resource settlements ‘fully funded’ only for the NHS, schools, and ‘priority infrastructure projects’.
Since the announcement, a further national lockdown has been imposed by government, which will increase the costs of fighting the pandemic. The direct costs of doing so have already been substantial. In July, the government confirmed allocation of an additional £31.9bn to health and social care in 2020/21, expanded by a further £16.4bn in September. This includes £15bn on personal protective equipment (PPE), and a total of £12bn on NHS Test and Trace, £1bn for ventilators and £10.5bn on other health spending including the use of the independent sector and vaccine development. Other costs will arise as the pandemic and policy response continues to evolve – for example, as a result of the large scale distribution and administration of a potential vaccine.
There has also been an estimated £100bn to help ameliorate the economic impacts of the pandemic response – such as the effect of lockdown on jobs and incomes. This includes support for workers through the Coronavirus Job Retention Scheme (JRS) and Self-Employed Income Support Scheme, loans and grants to businesses and a temporary boost of £20 a week through Universal Credit and tax credits for lower income families. This total is set to increase again after the second national lockdown with the JRS now extended to March 2021.
The trajectory of these costs is unclear. It is also uncertain how deep the economic downturn will be, and what additional impact Brexit will have. As a result, the Institute for Fiscal Studies concluded that this makes it ‘extremely difficult – and arguably unwise – to set supposedly fixed, multi-year, multi-billion-pound spending plans at this moment in time’.
So, the government’s decision to focus on the immediate spending challenges is understandable. But the absence of long-term funding commitments leaves many government policies to improve health and care in limbo. These include pledges to ‘level up’ economic opportunities across the country after a decade of austerity, reform social care funding, and improve NHS services in England in line with the NHS long term plan – as well as the delivery of manifesto pledges on workforce capacity and capital.
Recovery from COVID-19 is paramount, but longer term priorities must be kept in sight. The longer term matters for at least two reasons. First, some of the decisions taken now may come into conflict with longer-term goals. For example, investment to boost hospital capacity must not be at the expense of increased investment in primary and community services, while a 1-year horizon will make it tempting, yet again, to avoid social care funding reform.
Second, as we will show, the scale of the investment needed longer term is enormous: to lay the foundations for healthier lives for everyone, a just and effective social care system and an NHS that can prevent ill health as well as manage acute illness. This creates a conflict between what is needed and the government’s stated approach to debt and borrowing levels. It is important that government does not avert its gaze from this: a debate is needed sooner rather than later about the sustainability of broader public finances.
In this long read we set out the main priorities for the NHS, social care and policies to improve health over the medium and longer term. We assess the impact that COVID-19 has had and, where feasible, offer estimates of the amounts needed to meet these priorities in 2021/22, and in some cases to 2023/24.
Priorities for the NHS, social care and the nation’s health
24 November 2020
www.health.org.uk/publications/long-reads/spending-review-2020
Introduction
On 21 October 2020, the government announced it was abandoning plans to conduct a multi-year Spending Review in favour of a 1-year review to set budgets for government departments for 2021/22 only. The rationale for this shift was the continuing uncertainty created by the pandemic. The Chancellor stated that the Spending Review will ‘focus entirely on fighting COVID-19 and supporting jobs’, with multi-year resource settlements ‘fully funded’ only for the NHS, schools, and ‘priority infrastructure projects’.
Since the announcement, a further national lockdown has been imposed by government, which will increase the costs of fighting the pandemic. The direct costs of doing so have already been substantial. In July, the government confirmed allocation of an additional £31.9bn to health and social care in 2020/21, expanded by a further £16.4bn in September. This includes £15bn on personal protective equipment (PPE), and a total of £12bn on NHS Test and Trace, £1bn for ventilators and £10.5bn on other health spending including the use of the independent sector and vaccine development. Other costs will arise as the pandemic and policy response continues to evolve – for example, as a result of the large scale distribution and administration of a potential vaccine.
There has also been an estimated £100bn to help ameliorate the economic impacts of the pandemic response – such as the effect of lockdown on jobs and incomes. This includes support for workers through the Coronavirus Job Retention Scheme (JRS) and Self-Employed Income Support Scheme, loans and grants to businesses and a temporary boost of £20 a week through Universal Credit and tax credits for lower income families. This total is set to increase again after the second national lockdown with the JRS now extended to March 2021.
The trajectory of these costs is unclear. It is also uncertain how deep the economic downturn will be, and what additional impact Brexit will have. As a result, the Institute for Fiscal Studies concluded that this makes it ‘extremely difficult – and arguably unwise – to set supposedly fixed, multi-year, multi-billion-pound spending plans at this moment in time’.
So, the government’s decision to focus on the immediate spending challenges is understandable. But the absence of long-term funding commitments leaves many government policies to improve health and care in limbo. These include pledges to ‘level up’ economic opportunities across the country after a decade of austerity, reform social care funding, and improve NHS services in England in line with the NHS long term plan – as well as the delivery of manifesto pledges on workforce capacity and capital.
Recovery from COVID-19 is paramount, but longer term priorities must be kept in sight. The longer term matters for at least two reasons. First, some of the decisions taken now may come into conflict with longer-term goals. For example, investment to boost hospital capacity must not be at the expense of increased investment in primary and community services, while a 1-year horizon will make it tempting, yet again, to avoid social care funding reform.
Second, as we will show, the scale of the investment needed longer term is enormous: to lay the foundations for healthier lives for everyone, a just and effective social care system and an NHS that can prevent ill health as well as manage acute illness. This creates a conflict between what is needed and the government’s stated approach to debt and borrowing levels. It is important that government does not avert its gaze from this: a debate is needed sooner rather than later about the sustainability of broader public finances.
In this long read we set out the main priorities for the NHS, social care and policies to improve health over the medium and longer term. We assess the impact that COVID-19 has had and, where feasible, offer estimates of the amounts needed to meet these priorities in 2021/22, and in some cases to 2023/24.