The Spending Review: what does it mean for health and social care?

This briefing provides an independent assessment of where the Spending Review leaves the NHS and social care. Now that the dust has settled on the Chancellor’s announcements, our three organisations have come together to help ensure the debate is informed by a clear and objective analysis of the funding position and its implications for health and social care services.

The Spending Review announced that the NHS will receive a real-terms funding increase of £10 billion over the period from 2014/15 to 2020/21. It also announced that £6 billion of this funding would be front-loaded by 2016/17. The government argued that this delivers the £8 billion it had promised to fund the NHS five year forward view. The rest of the stated increase comprises additional funding for the current year announced in last year’s Autumn Statement.

Looking beyond the headlines

The figures announced in the Spending Review rely on a significant change in the interpretation of NHS spending. Previous governments have defined this as the totality of the Department of Health’s budget, worth £116.4 billion in 2015/16. However, this Spending Review effectively redefines NHS spending to mean NHS England’s budget only, £101.3 billion in 2015/16. Other health spending not included in NHS England’s budget – for example, spending on public health, education and training, capital and national bodies such as the Care Quality Commission and the National Institute for Health and Care Excellence – is excluded.

All three of our organisations will continue to use the previous definition in our analysis of NHS funding. Using this definition, and taking 2015/16 as the baseline, NHS funding in England will in fact increase in real terms by £4.5 billion by 2020/21. While this is still a welcome increase, it is clearly much less than was expected when the NHS settlement was announced. The Spending Review used 2014/15 as the baseline. The difference is largely accounted for by a reduction of more than £3 billion in spending that falls outside NHS England’s budget.

See the report at Nuffield Trust/ The Health Foundation / King’s Fund.