CIPFA's health and integration points on the settlement

Ahead of the expected announcements on 25 November, CIPFA believes that the government should act in accordance with sound principles for managing public finance. In health and social care, this would lead to an emphasis on: 

• Realistic and transparent assessment of spending pressures and savings capability.
• Medium to long term planning, incorporating action to invest strategically up front for later benefit.
• A flexible approach to where responsibilities should lie, emphasising the whole system rather than the sectors and organisations within it. 
• A willingness to think and act radically, with the potential for rebalancing the balance of taxation and the relationship between the citizen and the state.

Realistic and transparent assessment 

• CIPFA thinks that the key NHS planning figures of £30bn pressures and £22bn savings to be achieved over this government’s five years are both optimistic. The £30bn is likely to be understated as it:

• fails to allow for the impact of the move to seven day working
• doesn’t adequately build in the need to invest up front to drive transformation.

• The £22bn is likely to be overstated as it:

• represents efficiency savings at twice the rate historically achieved without any credible reason to suppose that such a step increase in performance will occur in the timescale required; and
• doesn’t adequately build in the need to invest up front to drive transformation.

• CIPFA has argued that such a review must come to one of three conclusions: increase health funding, introduce more charges, or explicitly reduce services. It is critical that the government does not fudge the matter by attempting to avoid all three options.

• Spending on adult social care has fallen by 30% in real terms over the past six years. That is a tribute to the cost control achieved by local authorities, but there are strong signs that the pay and price constraints which underpinned these reductions cannot be taken further. Fewer people are being helped, even though the key driver of spending – the over 85 population – continues to increase.  Reduced expenditure in this area impacts significantly on individuals’ quality of life, and also on the demand for health services. CIPFA and ADASS believe that even without factoring in the National Living Wage an additional £0.7bn per year is needed to maintain the social care system and prevent the knock-on costs to health. And public health spending, now within local authority budgets, needs to be maintained (whether or not it continues to be ring-fenced) if we are to break out of short-term thinking and create wellness, not just treat illness.

• Local authorities, driven by safety concerns in a statutory framework, have of necessity increased their spending on children’s services at a time of adult care spending reductions. However, the underlying issues remain as they were, so the increased share of spending dedicated to children’s social care will need to continue. Moreover, the long term financial view points to the considerable whole system costs which arise downstream when troubled children are insufficiently supported.   

Long term planning and investment

• The extension of the Better Care Fund into 2016-17 is welcomed, but to maximise the benefit from this approach it would make sense to announce a commitment to the funding transfer involved through to the end of this Parliament.

• The government should allocate at least £2 billion of additional funding in each year of this parliament to help the system move more towards prevention, rather than simply fixing problems, and to assist with the transitional costs of transformation. Given sufficient authority and support, Health & Wellbeing Boards could sensibly control this money.

• It would also make sense to equalise and free up the capital funding regimes across health and social care, the key point being to better incentivise health bodies locally to identify and utilise the proceeds from recycling local assets.

Whole system thinking 

• The particular mechanism chosen to take forward investment is less significant than the goal: to find ways to facilitate adequately funded joint working across the whole system. In this spirit, the Government should use its philosophical support for devolution to facilitate more radical moves towards devolved joint working by simplifying and liberalising the relevant frameworks and processes.  

• The knock-on impact on Health should be taken explicitly into account in making future funding decisions regarding other parts of the system of services which support people. This applies not only to social care, but also benefits, housing, transport and leisure which have important links to the overall health of the population. CIPFA thinks that any advantages to health of broader investment, or impacts on health due to public service disinvestment, should be part of the Government’s assessment of how best to support the NHS.

• In a similar way, more attention should be paid to the impact on social care of the linked changes to benefits and the minimum wage.  Disruption to existing patterns of support is likely to exaggerate the impact of general demographic pressures, and the effect of the introduction of the National Living Wage on domiciliary and residential care prices must be factored in and funded.

Willingness to think and act radically 

• It is, of course, much easier to make the case for more money than to find it. However, given that appropriate support for health and social care would be ‘virtuous spending’ to future advantage, it would make sense to prioritise investment in health and social care.  This could be achieved by recycling funds previously earmarked for earlier implementation of the now-deferred changes in the Care Act; by additional borrowing; or by a bespoke tax. That last possibility might take the form of accelerating devolution as a means of progressing integration more radically and rapidly than has happened to date, by linking it to increased local control of taxation.

• Going even further, to address the issues set out above within the current fiscal climate is likely to raise the most fundamental question of all: what should the Government be providing in terms of public services, and should it prioritise health above others?

These views are set out more fully in the two recent publications The Health of Health Finances (PDF, 435 KB) and Let’s Get Together: Integrating Health and Social (PDF, 849 KB)