Labour Research February 2017


Sustainable development?

Critics say that Sustainability and Transformation Plans for health and care organisations in England will create yet more chaos across the NHS.

The NHS in England is now embarking on another major organisational upheaval — implementing five-year “Sustainability and Transformation Plans” covering all aspects of NHS spending. 

The latest shake-up comes amid enormous pressures squeezing the health service and follows on from the wholesale marketisation reforms under the previous coalition government.

Threat to patient care

The stark warning from the British Red Cross at the beginning of the year that the NHS was facing a “humanitarian crisis” followed an unprecedented number of warnings last year about the escalating pressures facing the health service.

A joint report from the TUC and the union-supported NHS Support Federation last October, NHS safety — warnings from all sides, highlighted 12 separate reports from professional bodies, think tanks, NHS organisations and trade unions which raised the alarm about the pressures facing the NHS.These include reports from the Royal College of Physicians, the British Medical Association (BMA), the Royal College of Nursing (RCN), the Royal College of Midwives and the UNISON public services union expressing concerns about understaffing and the threat this posed to patient care. 

On top of these warnings, the Care Quality Commission, the regulator for health and social care services in England, issued a report in October stating its concerns about the safety of care, with 10% of NHS acute trusts rated inadequate for safety. 

Mike Adamson, chief executive of the British Red Cross, said the organisation was working “on the front line” to respond to “the humanitarian crisis in our hospital and ambulance services across the country”. The Red Cross had been called in to support the NHS and help get people home from hospital and free up much-needed beds.

An analysis by the Nuffield Trust health think tank showed that 50 of England’s 152 NHS acute hospital trusts were forced to declare an alert in December, signifying “major pressures compromising patient flow”. In January, The Guardian reported that 23 had declared the highest alert level, leaving them unable to deliver comprehensive care. The RCN said in January that many of its members were reporting the “worst conditions they have ever experienced”.

BMA chair Mark Porter said there had been “no signs from the prime minister since taking office that she understands the gravity of the situation the NHS is facing”. But the “unacceptable absence” of additional funding in the Autumn Statement had “only further exacerbated the crisis”.

NHS financial crisis

The perilous state of NHS finances was highlighted by a National Audit Office (NAO) report in November. 

The report, on the financial sustainability of the NHS in England, showed that in 2015-16, NHS commissioners, NHS trusts and NHS foundation trusts reported a combined deficit of £1.85 billion. This was more than three times the deficit of £574 million reported in 2014-15. 

Two-thirds of NHS trusts (65%) and NHS foundation trusts (66%) reported deficits in 2015-16, up from 44% of NHS trusts and 51% of NHS foundation trusts in the previous financial year. Overall, the net deficit of NHS trusts and NHS foundation trusts was £2.45 billion in 2015-16.

Referring to these figures as well as the increasing number of clinical commissioning groups (CCGs) unable to keep their spending within budget, Amyas Morse, head of the NAO, said financial problems in the NHS were “endemic” and “not sustainable”. 

Overall, the rate of increase in NHS funding in the 10 years from 2010 is projected to be the lowest on record, and well below that required to keep up with increasing demand. 

Government funding of the NHS

The government has repeatedly claimed that it is providing an extra £10 billion to the NHS over the five years to 2020-21. However, the use of this figure has been challenged by health sector analysts and also led to a rebuke by the House of Commons Health Select Committee.

The Conservative chair of the committee, Dr Sarah Wollaston, wrote to chancellor Philip Hammond last October stating that the continued use of the £10 billion figure was “incorrect” and that it gave a false impression that the NHS is “awash with cash”. 

The letter pointed out that the £10 billion figure could only be calculated by adding an extra year to the spending review period (2014-15), changing the date from which the real terms increase is calculated and disregarding the total health budget. 

Figures taken from the Department of Health’s annual accounts show that NHS England funding will go up by around £9 billion in real terms over the five years from 2015-16 to 2020-21. But other Department of Health spending, covering public health, education and training, capital funding, national bodies and other funding will be reduced by £4.8 billion in real terms, amounting to a net increase of £4.2 billion. 

A joint statement by the King’s Fund, Nuffield Trust and Health Foundation think tanks ahead of the Autumn Statement last November said that the projected funding increase was not enough to maintain standards of NHS care and also meet rising demand from patients and deliver the transformation in services outlined in the NHS five year forward view. 

Over the five years to 2020-21, the projected funding increases will average out at 0.9% a year in real terms. This is the same average increase as under the coalition government between 2010-11 and 2014-15, and is poor compared to a historical average increase of 3.7% per year. This also means that as a percentage of GDP, spending on the NHS would have fallen from 7.3% in 2015-16 to 6.7% in 2020-21.

In contrast, between 1997 and 2010, NHS spending increased as a share of GDP from 5.2% to 8% — the highest proportion since 1948. 

In order to meet increasing demand stemming from a growing and ageing population, the increasing prevalence of long-term health conditions and the cost of new advances in medicine, the Office for Budget Responsibility estimates that NHS spending will need to rise to between 7.6% and 8.3% of GDP by 2030-31.

NHS England chief executive Simon Stevens told the House of Commons Public Accounts Committee in January that NHS spending per head would actually be going down from 2018-19.

Forward view and projected efficiency savings

The NHS five year forward view argued for a greater emphasis on integration of services and on prevention of health problems. 

It projected that without additional funding or an increase in the annual rate of efficiency, rising demand and cost pressures on the health service would result in a gap between resources and patient needs of £30 billion by 2020-21. 

It said that additional funding of between £8 billion and £21 billion would be required by 2020, with the lower figure applicable if there was action to sustain social care and radically upgrade prevention and public health, as well as investment to transform services. The NHS would also need to deliver annual efficiency savings of 2%-3% a year. Overall, the implication was that £22 billion in savings would be required over the five years to 2020-21. 

In a joint statement ahead of the Autumn Statement last November, the King’s Fund, Nuffield Trust and Health Foundation think tanks said that delivery of these savings would be unrealistic given the “limited funds available to support service changes” and increasing pressures across the health and care system. The statement pointed out that the NHS has delivered productivity improvements of around 1.4% a year for the past decade, but that “it is clear that the easier options have been exhausted”. 

Around a quarter of the savings are expected to come from capping pay increases at 1% a year. 

The joint submission by health unions to the NHS Pay Review Body for 2017-18 says that pay caps over the last six years have led to a real terms average pay cut of 12.3% for NHS staff. It calls for a pay increase in line with RPI inflation. 

The think tanks point out that the planned reduction in the capital budget (investing less in buildings and equipment) runs counter to delivering the vision outlined in the NHS five year forward view, and does not amount to a sustainable strategy. 

Local authority public health budgets are also being cut by 3.9% a year, undermining the government’s commitments on prevention and the “radical upgrade” called for in the forward view. 

An estimated £1.2 billion of savings will also come from the abolition of the NHS bursary for students on nursing and related degrees, meaning they will have to apply for loans like other students.

Social care funding

At the same time, unions and campaigners are urging the government to act to address a crisis in social care funding. Adult social care funding suffered a real terms cut of 9% between 2009-10 and 2014-15, leading to a reduction of at least 26% in the number of older people accessing publicly-funded social care. This meant more than 400,000 fewer older people getting the care they needed, and exacerbating pressures on the NHS. 

Although the government announced increased funds for social care in the 2015 spending review, and a new social care precept to allow local authorities to increase Council Tax by 2% to fund care, there will be an estimated funding gap of at least £2.3 billion by the end of this Parliament. A large proportion of the new funding will need to be used to fund implementation of the National Living Wage. 

Sustainability and Transformation Plans

Added to these pressures, further substantial change to health and care services is now under way. 

NHS planning guidance published in December 2015 required NHS providers, CCGs, local authorities and other health and care service providers in 44 geographical areas in England to develop Sustainability and Transformation Plans (STPs) so as to deliver objectives set out in the NHS five year forward view, published the previous year.

These bodies needed to work together to develop a five-year plan, covering all areas of NHS spending, focusing on better integration with social care and other local authority services, covering the period from October 2016 to March 2021. 

A UNISON briefing says that in theory STPs have the potential to encourage closer integration between health and social care services, bring commissioners and providers together and encourage collaboration between providers. However, £22 billion worth of “efficiency savings” is being sought by 2020-21, and there is an expectation that STPs indicate how they will contribute to these savings through “service reconfigurations” and system changes. 

Guy Collis, UNISON policy officer for health, told Labour Research that “the fact that such a substantial change is being attempted without the necessary funding is the most pressing concern”. 

He said that the process had also been undermined by a lack of engagement with staff and the public. The union says that there is a “serious risk” that the plans are seen “merely as the vehicle for delivering cuts to services that the government’s ongoing underfunding of the NHS has made inevitable”. Savings through further cuts to staff pay, terms and conditions were also a distinct possibility. 

A Health Service Journal poll of 99 CCGs published in October found that one in three intends to close or downgrade A&E departments in the next 18 months, with one in five expecting to close consultant-led maternity services.

The Unite general union has branded STPs as standing for “slash, trash and privatise”. It says the plans are not based on clinical evidence and are likely to mean extensive cuts to services, including closures or relocations of local hospitals and A&E departments in order to meet the £22 billion target. 

Unite research officer for health James Lazou told Labour Research that the union would support moves to genuinely integrate and improve NHS and social care services. 

But while the government is presenting STPs as the solution to the NHS funding crisis, “in reality they are simply asking NHS staff to deliver more and better services with less money and resources”. 

Lazou said that the STP process was not “evidence-based policy” but was “being driven by an ideological cuts programme”.

The NHS Support Federation says that government guidance makes clear that saving money is the primary goal of the STPs. Analysis of published plans last year showed a focus on cuts to acute services, including hospital closures. 

And the NHS regulator, NHS Improvement, issued instructions to STP leaders in June that back office, pathology services and payroll should be targeted for cost savings. It also asked STPs to identify elective services that could be closed or transferred to other providers. 

The government set up a £2.1 billion Sustainability and Transformation Fund for 2016-17 to help finance the required changes, with further funds to be provided in subsequent years. Funding will only be released if the STP “footprint” can show that it can balance its books over four years. While £1.8 billion has already been released, it has all gone to bailing out NHS trusts’ deficits. 

All 44 STPs had been published by December 2016. The BMA says that its analysis of the plans shows that they entail £26 billion being slashed from health and social care costs over the five years. It says that most doctors have not been consulted about the STPs. 

Unite national officer for health Sarah Carpenter says that the union suspects that STPs “are a device to further cut services, erode patient care, and introduce local pay and employment conditions”, with the “spectre of further privatisation” also lurking in the background.

The union has also complained about the secretive nature of discussions taking place to formulate plans, with STPs being prepared “by mainly local NHS apparatchiks with no public involvement”. Moreover, the boards drawing up STPs have no clear legal status, exacerbating a lack of accountability. 

Unite is encouraging members to sign a petition calling on the government to properly fund the NHS and scrap the STP programme. It is also supporting the national It’s Our NHS demonstration, taking place in London on 4 March. 

UNISON has called for an immediate pause in the process so that people have the chance to give their views. It says that both the government and NHS England have failed to consult properly with the public and staff on these reforms, and that the reforms were being pushed through too rapidly.

It has also called for proper staff and trade union engagement in the development of the plans, along with reassurances from the government around security of employment and pay, terms and conditions. And it says STPs should also be subject to scrutiny from local authority bodies such as health overview and scrutiny committees, and health and wellbeing boards. 

Delayed treatment

The pressure on services was further highlighted by figures released by NHS England at the beginning of December last year. These showed that the number of people awaiting non-urgent hospital procedures had reached 3.9 million in October, the highest level recorded since December 2007. This figure amounts to about one in in 14 (7%) of the population in England waiting to have an operation.

Furthermore, 360,255 people were not treated within the 18-week maximum supposedly guaranteed by the NHS constitution — the highest this figure has been since October 2008. The NHS was badly missing its target of treating 92% of all those waiting within 18 weeks. The proportion of those treated was 90.4%, the worst performance since March 2011.

And NHS England figures released just before Christmas showed that the number of NHS patients who had urgent operations cancelled was at its highest since it began recording this data six years previously. 

Analysis by the Royal College of Emergency Medicine (RCEM) for the week prior to Christmas showed that only around 77% of patients in A&E were being seen within four hours, with some trusts struggling in the 50%-60% range. The college said that this was leading to “serious safety issues”.

RCEM president Dr Taj Hassan said the emergency care system was “on its knees”. And he said that funding corrections for the NHS and social care had “never been more vital” and that further cuts in the form of STPs “would be potentially catastrophic”.