Difficult choices loom regarding which areas of patient care to cut back
NHS leaders face ‘impossible’ choices over whether to cut patient care or reduce investment in much needed diagnostic capacity and new technology areas after a series of unexpected cost pressures – including a new pay award for staff – left the NHS facing real terms cut in funding.
The Government has confirmed that it will make further investment in the pay of NHS staff of approximately 5% overall. However, only 3% of this investment in pay has been budgeted for. With no extra money coming from the Government to pay for the additional 2% investment, the NHS will have to absorb this within its existing budget. This is around an extra £1.8bn of costs that were not planned for.
The extra costs of pay are on top of a range of other unexpected cost pressures that are eating into the NHS budget, including the impact of high energy costs and soaring inflation more generally, which is reducing the value of the NHS budget. Furthermore, the ongoing costs from COVID-19, including from providing free lateral flow tests for staff, have made a significant economic impact.
New analysis from the NHS Confederation confirms that these extra costs mean the health service is this year facing a real-terms cut in funding of between £4bn and £9.4bn. This is one of the reasons why the NHS is required to make efficiency savings of 2.2%, which is double the requirement of recent years.
It is in stark contrast to the planned 3.8% annual real terms increase in NHS funding up to 2024/25, which was outlined in the government’s Spending Review last October.
Local NHS leaders now fear that these extra costs will hold back attempts to reduce the size of the elective waiting list. These are key areas of investment that are required to reduce the elective and cancer care backlog.
Matthew Taylor, chief executive of the NHS Confederation, warned: “We have been calling for the government to help NHS and social care staff with the cost-of-living crisis by increasing their pay, but what we did not expect was that these extra costs would have to come from within the current health budget. Put simply, this wasn’t budgeted for and will have unintended consequences for patient care.”
“NHS leaders are used to having less money than their local services need, but what we are seeing now is a yawning gap between the funding the NHS needs and what it has at its disposal. The real terms cut this year is at least £4bn and we think it represents the first real-terms cut in funding since 1997.”
“The alternative approach is for political leaders to bury their heads in the sand and wish away the reality. But, as ever, patients will suffer if we don’t collectively grip this challenge. Failure to do so will significantly impact the kind of care that the NHS can provide to the public in the months and years ahead,” he added.
