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Representation to the 2015 Spending Review The Health Foundation September 2015 About the Health Foundation The Health Foundation is an independent charity working to improve the quality of health care in the UK. We are here to support people working in health care practice and policy to make lasting improvements to health services. We carry out research and in-depth policy analysis, fund improvement programmes to put ideas into practice in the NHS, support and develop leaders and share evidence to encourage wider change. We want the UK to have a healthcare system of the highest possible quality – safe, effective, person-centred, timely, efficient and equitable. 2 Figure 1: Public spending on health in the UK 1949/50 to 2013/14 in 2014/15 prices, and as a percentage of national income 160 140 £billion 120 8% Public sector spending on health % GDP Public sector spending on health 7% 6% 100 5% 80 4% 60 3% 40 2% 20 1% 0 0% Source: Health Foundation calculations, using data from: Public Sector Statistical Analyses 2014 (HM Treasury), Fiscal Facts: Spending by function (Institute of Fiscal Studies), OHE Guide to UK Health and Health Care Statistics 2013 (Office of Health Economics, Hawe E and Cockcroft L), UK National Accounts – The Blue Book (Office for National Statistics), GDP deflators at market prices, and money GDP (HM Treasury). Note: GDP deflators for 1949/50 to 1954/55 are estimated. 3 Table 1: Health expenditure in England from 2009/10 to 2015/16 health expenditure, cash terms (£) 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 98,419 100,418 102,844 105,222 109,777 113,300 116,574 2.0 2.4 2.3 4.3 3.2 2.9 108,558 109,226 109,976 112,419 114,433 116,574 -0.7 0.6 0.7 2.2 1.8 1.9 annual change, cash terms (%) health expenditure, 2015/16 prices (£) annual change, real terms (%) 109,341 Source: PESA 2015 Note: health expenditure is measured as total department expenditure limit, excluding depreciation 4 Table 2: Average annual increase in hospital activity based on providers ‘time series, 2008/09-2014/15 2008/09-2009/10 2010/11-2014/15 Outpatient first attendances 7.6% 2.1% Total inpatient admissions 2.8% 2.0% non-elective 3.2% 1.0% elective 2.6% 2.8% 4.7% 1.1% of which: A&E Attendances Source: NHS England A&E attendances and Monthly hospital stats 5 Figure 2: Average annual increase in hospital activity based on providers’ time series, 2009/10-2014/15 6 Figure 3: Change in number of trusts in deficit from 2012/13 to 2014/15 2012/13 2014/15 2013/14 Deficit 28, 11% Surplus 66, 27% 129,52 % 221, 89% 117,48 % 183, 73% 7 Figure 4: change in annual productivity for the acute sector from 2009/10 to 2013/14 2.83% 0.41% 2010/11 2011/12 -0.94% -0.95% 2012/13 2013/14 Source: Lafond, S. Roberts, A. Charlesworth, A. Hospital finances and productivity: in a critical condition? The Health Foundation, 2015. 8 Table 3: Expenditure by Councils with Adult Social Services Responsibilities (CASSRs) by accounting category, 2009/10 to 2013/14, England, £bn in 2015-16 prices 2009/10 Net current expenditure 2010/11 16.1 2011/12 15.8 2012/13 15.7 Change 2009/10 to 2013/14 2013/14 15.3 15.0 -7% Average annual change -2% Source: NASCIS PSS-EX1 return 9 Figure 5: Indexed growth in real total gross expenditure on Adult Social Care in England and demographic pressure, 2007-08 to 2012-13 115 Expenditure 110 Population 65+ 105 100 95 90 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Source: CIPFAstats (online), Social Care Actuals 2007/08-12/13 PSS EX1 return via Buchardt T, Obolenskaya P, Vizard P. The Coalition’s Record on Adult Social Care: Policy, Spending and Outcomes 2010-2015. 2015. 10 Figure 6: Number of clients receiving services (community-based services, residential care or nursing care) provided or commissioned by local authorities with social services responsibilities, by client type, 2009/10 to 2013/14, England 1,800,000 1,600,000 1,400,000 Total, 1,273,280 1,200,000 1,000,000 Physical Disability, 841,645 800,000 600,000 400,000 Mental Health, 257,540 200,000 2009/10 2010/11 2011/12 2012/13 2013/14 Source: NASCIS; Referrals and Packages, module P1 11 Figure 7: Need for and receipt of help with Activities of Daily Living (ADLs) in the last month, by equivalised household income and sex Men Received help 11% Middle 17% Lowest 12% Highest Women Income tertile and sex Needed help 10% Highest 19% Middle 21% Lowest 0 5 10 15 20 25 30 35 40 Percentage Source: Health Survey for England, 2013 12 Table 4: Estimated budget for English NHS in 2019/20 and 2020/21 according to the manifesto commitment, assuming inflation rises as assumed for GDP Deflator, July 2015 2015/16 2019/20 2020/21 TDEL plus real terms £8bn increase by 2020/21 (2015/16 prices) £116.6bn £122.9bn £124.6bn TDEL plus real terms £8bn increase by 2020/21 (cash terms) £116.6bn £132.4bn £137.5bn 13 Table 5: Meeting the manifesto commitment – implied increases in the NHS England, Public Health England and Health Education England – all financial figures in billion, stated in cash terms 2015/16 2019/20 2020/21 Average annual change in cash terms TDEL plus £8bn real-terms increase by 2020/21 (cash terms) £116.6 £132.4 £137.5 3.4% 1.3% NHS England receives £8bn (cash terms) £101.1 £115.8 £120.5 3.6% 1.5% PHE budget rises at same rate as NHS England (cash terms) £3.7 £4.2 £4.4 3.6% 1.5% PHE budget received from Department of Health rises at same rate as NHS England (cash terms) £0.9 £1.0 £1.0 3.6% 1.5% HEE budget rises at same rate as NHS England (cash terms) £4.9 £5.6 £5.8 3.6% 1.5% Remainder (cash terms) £9.7 £10.0 £10.2 1.0% -1.0% Amount of remainder for Capital £4.6 £4.8 £4.8 1.0% -1.0% Average annual change in real terms 14 Table 6: The affordability challenge as set out in Monitor planning guidance 2014/15 2015/16 2016/17 2017/18 2018/19 Total affordability challenge 3.1% 6.6% 5.5% 4.7% 4.6% Provider efficiency 2.0% 2.5% 2.0% 2.0% 2.0% System efficiency 1.0% 2.0% 0.1% 1.0% 1.0% Remaining challenge 0.1% 2.1% 2.5% 1.7% 1.6% £1.46bn £1.7bn £1.26bn £1.26bn Remaining Challenge (£) 15 Figure 8: Provider forecasts of future demand – 2012 and 2013 forecasts 185000 180000 175000 170000 165000 160000 155000 150000 2008 Actual staff in post 2009 2010 2012 (SHA) provider 2011 2012 2013 2014 2013 provider's minimum forecast requirements 2015 2016 2017 2018 2013 provider's maximum forecast requirements Source: Health Education England 16 Figure 9: Average weekly earnings in the public and private sectors December 2000 – June 2015 (rolling 12-month averages Private Public 500 480 Nominal £ per week 460 440 420 400 380 360 340 300 DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN SEP DEC MAR JUN 320 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Health Foundation calculations using Office for National Statistics series KA4U for the public sector (excluding financial services) and series KA4O for the private sector, derived from the Monthly Wages and Salaries Survey. Updated from: Cribb, J. Emmerson, C. Sibieta, L. Public sector pay in the UK. IFS. 2015. 17 Figure 10: Annual average real-terms change in average earning per person from 2009/10 to 2013/14 Public sector NHS Private sector -0.31% -0.51% -1.77% Source: HSCIC NHS Staff Earnings Estimates to January 2014; Provisional statistics, ONS Annual Survey of Hours and Earnings Note: Average earnings for NHS staff in England exclude earnings of staff employed under bank and agency contracts. Public and private sector pay refers to average annual gross pay per person for all UK employees, while NHS pay refers to average earning per employee of the English NHS. 18 Figure 11: Difference between public and private pay, January 2008 to June 2015 10 2010 2013 MAY MAR JAN NOV JUL 2014 SEP MAY JAN MAR SEP NOV JUL MAY JAN MAR NOV JUL 2012 SEP MAY MAR JAN NOV JUL 2011 SEP MAY JAN MAR SEP NOV JUL MAY JAN MAR NOV JUL 2009 SEP MAY JAN MAR NOV JUL 2008 SEP MAY JAN 0 MAR Nominal £ per week 5 2015 -5 -10 -15 Source: Health Foundation calculations using Office for National Statistics series KA4U for the public sector (excluding financial services) and series KA4O for the private sector, derived from the Monthly Wages and Salaries Survey. Updated from: Cribb, J. Emmerson, C. Sibieta, L. Public sector pay in the UK. IFS. 2015. 19 Table 7: Transformation Fund costs, 2016/17 to 2020/21 (2015/16 prices) 2016/17 2017/18 2081/19 2019/20 2020/21 Efficiency Strand £1.1bn £1.1bn £1.1bn £1.1bn £1.1bn Development Strand £0.4bn £0.8bn £1.0bn £1.0bn £0.7bn Total Transformation Fund £1.5bn £1.9bn £2.1bn £2.1bn £1.8bn 20 Keep in touch For all the latest news and developments from the Health Foundation: Visit our website at www.health.org.uk Subscribe to our monthly email newsletter at www.health.org.uk/newsletter Register for email alerts to be notified about our latest work at www.health.org.uk/updates Take part in conversation and debate about current healthcare issues on our blog Follow us on Twitter, Facebook or LinkedIn. 21