An NHS funding plan at last – but what’s the catch?

The money has been promised to frontline services, but details of other areas of health spending are yet to be announced

Long awaited, much speculated about and now announced by the Chancellor George Osborne on an early morning visit to a south London GP surgery - the funding plan for NHS England over the next four years has been set out at last. So is there a catch and what are the strings attached?

The immediate reaction from NHS leaders is relief that the Chancellor has delivered the funding they asked for in the next financial year. Simon Stevens, the Head of NHS England, seemed relaxed enough as he joined Mr Osborne and the Health Secretary Jeremy Hunt for a chat with staff at the Streatham High practice. Patients waiting for their appointments had an unrivalled opportunity to pass on their views of the NHS.

The Chancellor has agreed to award £3.8 billion above inflation to NHS England, the provider of frontline services, for the 2016/17 year. This amounts to a 3.7% real increase to the budget of £101 billion this year, significantly above the average of just over 1% in recent years. So the demand for "frontloading" of Government investment in the NHS has been delivered.

Looking further ahead, the annual increases fall back nearer 1% each year but in 2020/21 the much talked about pledge of an extra £8 billion is delivered with a little more on top at £8.4 billion. For the day to day running of the NHS, then, Simon Stevens has got what he asked for. Ministers argue that the additional funding amounts to more than £10 billion once the £2 billion boost for health this year is included.

Short term gains

So far, so straightforward. But as always there are complications once the detail is scrutinised. Simon Stevens had originally asked for the costs of delivering Government pledges on 7 day services in the NHS to be covered separately. But the Treasury does not see it that way and expects the numbers announced today to include financing more services in hospitals at weekends and encouraging GPs to extend access.

As one source put it, the financing of a wider range of services at weekends will be "backloaded" - in other words, a few years down the track. Under the Treasury allocation, there is a sharper annual increase in 2020/21 which could help fund the 7 day plan - but that is after the next General Election. The question now is how much can be delivered by NHS England before polling day.

NHS England's budget is not, of course, the whole story for health funding. As I revealed last Friday, cuts in public health spending by local authorities will be made. This includes areas like sexual health and smoking cessation. Experts in the field argued then that reductions in spending on prevention will not help the NHS one bit. And we don't know yet what the Government plans for social care are. All will become clearer in the full spending review announcement on Wednesday.

Scotland, Wales and Northern Ireland's administrations will receive proportionate increases based on the Department of Health's overall budget which will be published on Wednesday. With reductions in non NHS areas, that budget will not rise as fast as the NHS England figure announced today.

The £3.8 billion for next year is more than what some had predicted. But unless the Government clampdown on agency staff spending delivers radical reductions, an underlying £2 billion annual deficit amongst trusts will be carried forward. Add in the cost of higher pension contributions taking effect with public sector pension reforms and a chunk of the new money is eaten up just keeping services going as they are now.

Short term, in other words next year, Simon Stevens and Jeremy Hunt have got the money they wanted. Further afield the immense challenge of delivering efficiency savings and a wider range of weekend services remains.