Budget March 2021 – A cut in funding for the NHS

Rishi Sunak's first budget of 2021 on 3rd March has given no new money to the NHS. In fact, it is worse than just no new money, in the red book published alongside Sunak’s budget statement, the NHS England budget is shown to fall from £148bn in 2020/21 to £139bn in 2021/22. In 2020/21 NHS England got £18 bn in extra funding for its Covid-19 response, in 2021/22 it will get just £3 bn in extra funding, although the cost of the Covid-19 response is unlikely to have fallen so sharply. 

The same goes for the total spending at the Department of Health and Social Care (which includes NHS England) - in 2020/21 it is due to be £199.2 bn, which includes £58.9 bn in extra money to cover Covid-19 spending, but in 2021/22 this total spending will fall to £169.1bn, which includes just £22 bn for Covid-19 response purposes. 

There has been considerable criticism of Sunak’s budget and its lack of support for the NHS and social care from politicians, NHS leaders, unions and NHS commentators.

Jonathan Ashworth, the shadow health secretary, said “Rishi Sunak promised to be ‘open and honest’ with the British public. But buried in the small print of his budget is a cut to frontline NHS services that will increase pressure on staff and do nothing for patients stuck on growing waiting lists.” 

Dr Jennifer Dixon, Chief Executive of the Health Foundation, noted that the budget statement is “a cause for alarm for the NHS and social care too.” Noting that the budget does not provide sufficient funding “to support the direct costs of managing COVID-19 in 2021/22 and beyond,” and raises major concerns about how the NHS will deal with the huge backlog of care, the increased demand for mental health services and make any sort of progress to modernisation or investment in the NHS’s workforce.

The budget also made no mention of pay rises for public sector staff, something called for by many healthcare unions, including the RCN, UNISON and the Royal College of Midwives, nor the additional funding requested by GP leaders to guarantee that patients can continue to access normal services and the GP and primary care workforce can be expanded. 

Prior to the budget, NHS leaders had called for another £10 billion for the NHS to enable it to go some way to reduce the huge backlog of operations, cope with the increase in demand from patients with “long Covid” and people needing mental health services.

Funding before the pandemic 

Before the pandemic, the NHS was just entering the second year of the long-term plan, attached to which was real-terms funding growth of around 3.3% per year for NHS England’s budget (this excludes budgets for several other health-related services, including public health and health education). 

This increase in funding at the time was considered to be much too low and that without extra funding and a workforce plan that solves the current staffing crisis the long-term plan was undeliverable. This extra funding would have been just enough to keep the NHS on its feet but would not have provided a long-term solution for improving services and keeping up with increasing demands. 

Now the situation the NHS finds itself in is a million miles away from early 2020, with billions in extra costs associated with Covid-19, including maintaining a test and trace system, infection prevention and continued roll-out of vaccines. The Health Foundation has predicted these costs as around £27 bn in 2021/22, but Sunak’s budget contains only £22 bn to tackle these extra costs.

None of this extra spending contributes to realising the NHS long-term plan for modernising and transforming services, nor does it contribute to coping with any increase in demand due to Covid-19 or to the workforce plan; the NHS continues to face staff shortages, with around 100,000 vacancies.

The Health Foundation has calculated that, excluding the costs associated with directly managing Covid-19, the cost of restoring waiting times, additional mental health demand and lower productivity will mean the NHS will need around £10 bn extra for 2021/22. 

In addition, the workforce plan will need up to £1 bn extra a year in each of the next three years, public health will need an extra £3 bn, and an additional £1 bn a year will be needed for capital investment in the NHS. The conclusion is that without this investment, the NHS will not deliver the long term plan, nor will it be resilient enough to weather future health shocks.