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

2. ©The King’s Fund 2010 The Coalition Emergency Budget outlines tax rises and spending cuts…

3. ©The King’s Fund 2010 …which imply between 25% and 40% real cuts in all unprotected spending departments…

4. ©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.

5. ©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….

6. ©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

7. ©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…

8. ©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.

9. ©The King’s Fund 2010

10. Clinical governance Waiting times £21 billion Shortfall if no real rise for next 3 years and no productivity improvement £126 billion 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 drivers Capital Real pay and prices But why improve productivity… to do what, precisely?

11. ©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…

12. ©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….

13. ©The King’s Fund 2010 Thank you John Appleby Chief Economist j.appleby@kingsfund.org.uk