the outlook for nhs and adult social care funding john appleby september 2010

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©The King’s Fund 2010 The outlook for NHS and Adult Social Care funding John Appleby September 2010

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The outlook for NHS and Adult Social Care funding John Appleby September 2010. The Coalition Emergency Budget outlines tax rises and spending cuts…. …which imply between 25% and 40% real cuts in all unprotected spending departments…. Adult social care funding will be under terrific pressure. - PowerPoint PPT Presentation

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Page 1: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

The outlook for NHS and Adult Social Care funding

John ApplebySeptember 2010

Page 2: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

The Coalition Emergency Budget outlines tax rises and spending cuts…

Page 3: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

…which imply between 25% and 40% real cuts in all unprotected spending departments…

Page 4: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

Adult social care funding will be under terrific pressure.

Historically, the 50% real increase in total public since 1997 spending has not kept pace with demand, expectations and desire for higher quality care

An increasing proportion of care funding borne by council tax – up to 39% now, but as high as 80% for some councils.

Eligibility/access criteria now pretty tight too.

Plurality of funding contributing to social care: £4.4 bn AA; £9.8 billion DLA; £2 billion user charges; £5 billion (?) out of pocket spending.

Page 5: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

Councils planning real total spend reductions of 25% over three years

Social care services could be protected – but only up to a point, and depends on financial positions of individual councils. Little room for manoeuvre financially.

Expectation is higher user charges, even tighter eligibility criteria, some efficiency savings/productivity gains(?)

Inevitable implications for health care….delayed discharges? Higher avoidable admissions?

Pressure too on the benefits side: switch to CPI from RPI for benefits uprating; tightening of medical criteria for DLA (to reduce claims by 20%)….

But, some expectation that NHS may transfer funds….

Page 6: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

…but the NHS is protected from cuts

The Spending Review will reveal how much the NHS gets – but it is unlikely to be anything like the 6% to 7% real increases it has received over the last nine years…

We will guarantee that health spending increases in real terms in each year of the Parliament,

while recognising the impact this decision will have on other

departments

Page 7: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

1% pa real increase implies falling share of GDP for health

If the NHS got 1% real increase each year…

Page 8: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

Although protected from real cuts, the NHS will face increasing demand and cost pressures over the next few years…

If we want to meet these and improve the quality of services the NHS will have to improve its productivity – and hopefully its efficiency

With no real rise and no productivity improvement, meeting Wanless’s aspirations for the NHS in 2013/14 requires productivity improvements to the value of around £21 billion – around 20% of the current English NHS budget.

Page 9: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

Page 10: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

Clinical governance

£21 billion

Shortfall if no real rise for next 3 years and no productivity improvement

£126billion

NHS funding needed in 2013/14 to meet Wanless NHS ‘vision’

£12 Bn

£1.6 Bn £1.8 Bn

£3.5 Bn

£1.4 Bn

£0.4 Bn

Improve quality

Demand driversCapital

Real pay and prices

But why improve productivity… to do what, precisely?

Page 11: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

£21 billion

..around 6% productivity gain each year for three years..

£14 billion

..around 4.5% productivity gain each year for three years

£11 billion

..around 3.5% productivity gain each year for three years

Funding gap with no real increase in spending and no productivity gains..

Productivity gap with pay and capital spend freeze and no further investment in reducing waiting times..

Productivity gap with pay and capital spend freeze, no further investment in reducing waiting times…and 1% real spending increase each year to 2013/14

Year on year productivity gains of around 6% is a hugely daunting task for the NHS. But there is some relief…

Page 12: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

Although with some tough decisions on pay, capital and waiting times, together with a modest real increase in funding, the productivity challenge will be less daunting, it is still significant.

The question now is what, in practical terms, the NHS needs to do.

The questions for social care are much more difficult….

Page 13: The outlook for NHS and Adult Social Care funding John Appleby September 2010

©The King’s Fund 2010

Thank you

John ApplebyChief Economist

[email protected]