Spending review provides breathing space for the NHS

George Osborne came up trumps this week for the NHS. The demands on him to make spending commitments in his Autumn Statement outweighed the resources he had at his disposal. Under pressure on all sides – not least to please the House of Lords on tax credits, the military on defence spending and his own party on police funding – he managed to put the NHS towards the front of the queue. Public housing and local government were not so fortunate.


That the chancellor made the NHS a priority owes much to the tenacity of Simon Stevens. His refusal to budge from the deal he made with government when the Five year Forward View was published left Mr Osborne in a perilous position. Ignore the warning signs in the NHS – deficits growing, performance deteriorating, waiting times rising – and it would be obvious who was to blame.  An NHS heading to financial meltdown would have spelled big political trouble for a “One Nation” government keen to prove it is safe in their hands. Mr Osborne had little choice other than to deliver what he had previously promised.

Even then there is some sleight of hand in the detail. Public health and training budgets have been clobbered. And the promise to free councils from their council tax caps if they agree to invest more in social care – though welcome – is not the long-term answer to making elderly care sustainable.  It will, however, offer some much-needed respite from the diet of cuts that the care sector has been experiencing – in the last year alone 3,000 care home beds have been lost with a ricochet felt in hospitals throughout the country.  Nor will it magic away the pressures on primary, community, mental health and acute services. Winter continues to loom large. Mr Osborne’s extra £3.8 billion is not a get out of jail card.

But it does provide relief for a hard-pressed NHS. All in all, it was probably as good a settlement as the NHS could have got in the circumstances. It also leaves the ball squarely in the NHS’ corner. No-one should kid themselves. Mr Osborne will not simply keep on giving. Future years’ will not nearly be so generous. So this cash will have to be used wisely. Tricky decisions will now have to be taken about balancing the need for immediate liquidity in the system with the need to invest for the longer-term. The £30bn funding challenge identified in the FYFV has not gone away.  Most of it will have to be found through big change not more big cash.

So the quid pro quo for this investment is that the NHS will have to put its foot to the floor in speeding up reforms to how care is delivered and organised. Some of that depends on decisions at national level to get the architecture of reform right – in improving how regulation works and how money flows. It depends too on achieving a better balance of reform levers between welcome efforts to integrate services with a renewed drive to inject competitive pressure and user power. The risk otherwise is that integration creates local monopolies rather than more responsive patient-centred services. 

In the end that cannot be delivered by the centre.  At best, it can create the conditions for change and provide the right regulatory, support and financial framework to faciIitate it.  But leadership for change will have to come from local efforts to improve care services. There are good reasons for optimism. Throughout the country there is a flowering of genuinely innovative local ideas and initiatives to integrate health and social services, engage with local communities, adopt new technologies and build new partnerships. 

The pace and scale of those efforts now needs to be taken to the next level. Tinkering with change will not save the NHS.  It requires a fundamental shift in how care is provided and how patients are engaged. That will mean an unprecedented shift in its culture and the skillset of its workforce. Above all, it will require many more of its managers to think and act like leaders- simultaneously taking the tough decisions to get their organisations stabilised while adopting a wider local systems mindset instead of a narrow institutional one. It will mean both managing for today while leading change for tomorrow.

None of that is easy. But the financial breathing space the NHS has been given is a gift that must not be squandered. Change will have to happen not just because the cash is running out – but because time is running out for a system that was designed to deal with yesterday’s challenges not tomorrow’s. Meeting these challenges will be daunting but it opens up an enormous opportunity. To reshape how care is delivered so that we improve outcomes, optimise resources and, empower patients.

Alan Milburn is chair of PwC’s Health Industries Board.  This article first appeared in the HSJ.

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