King's Fund analysis - NHS funding: what we know, what we don’t know and what comes next
Following news that hte government is offering real-terms funding growth for the NHS of 3.4 per cent a year over the next five years, amounting to an extra £20.5 billion by 2023/24, the King's Fund analyses what is included, what is yet to be determined and outlines what we might expect to happen over the next few months as the ’plan’ for spending this money is developed.
The government’s offer applies to the Mandate funding provided to NHS England. The NHS Mandate is an annual publication from the Department of Health and Social Care that sets out what the government wants the NHS to deliver for the year and also sets its spending. The offer of new funding commitment uses 2018/19 as its baseline year (the year from which growth is measured). The 2018/19 Mandate was published on 20 March and it set the budget at £113.8 billion for the year excluding a few technicalities.1 However, there are two important things to note about this Mandate.
- First, the NHS has agreed a three-year pay deal with staff covered by Agenda for Change who make up the largest element of the NHS workforce. HM Treasury has always promised to cover the costs of this pay deal: current estimates suggest that it will cost £800 million in 2018/19, making a grand funding total of £114.6 billion for 2018/19. The 3.4 per cent will work off this higher baseline.
- Second, the Mandate includes more than the money provided to NHS England and CCGs to spend on services. It also includes three other areas namely: £2.45 billion set aside for the Provider Sustainability Fund; £1.8 billion spent on commissioner running costs, i.e. the administration costs of CCGs and NHS England; and £1.2 billion spent on some public health services that are provided through the NHS (mostly screening programmes and the vaccination and immunisation programme). These are all included in the £114.6 billion.
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