THE BLOG

Is Osborne's NHS Handout as Good as It Seems?

25/11/2015 10:23 GMT | Updated 25/11/2016 10:12 GMT

As part of this weeks' spending review, the Chancellor announced that the health service will receive an extra £3.8bn pounds next year and an extra £1.5bn in 2017/18 to help deal with the pres-sures of rising demand and staff shortages. With the service on course for a total deficit of £2bn this year - the largest in its history - this would seem to be welcome news indeed.

However, the headline figures mask some more concerning elements of the settlement. In particu-lar the Chancellor is likely to cut other parts of the Department for Health budget to help fund the increase. Notably, some of the extra funding for the NHS will come from cuts on public health spending, with sources in the public health sector suggesting that year-on-year cuts of 4 per cent over this parliament will be announced. This comes on top of an earlier in-year raid of £200m by the Treasury.

The decision to provide extra funding for the NHS - while cutting public health - will accentuate a long term disparity in funding between these parts of our health system. In September 2014 the Kings Fund calculated that £1742 per head was spent on traditional NHS care, compared to £49 per head on public health via local authorities. As a result of this week's decision, this gap will get wider.

This is a problem because politicians are prioritising funding for the acute and responsive aspects of our health system rather than investing in preventative policy which would help to reduce demand and cost pressures on the NHS in the long term, as well as being crucial in addressing inequalities in health outcomes. For example, the Kings Fund highlight that interventions to upgrade housing stock deemed to be damaging to health can pay back up to £70 for every £1 spent, while interventions to increase physical activity in schools can pay back up to £23 for every £1.

Why are policymakers failing to invest in public health despite good evidence in its favour? The reasons are many and complex, but one of the mains drivers is that often these savings do not accrue in time to balance the books in-year, with some even failing to pay back within the five year timetable which the NHS is working to.

However, with recent analysis by IPPR and the Health Foundation showing that by 2030 a £9bn funding gap will remain, even assuming 2.5 per cent annual increases in health and care spending up until 2030, short term thinking is just not possible. Policy makers must not only look to manage demand tomorrow, but much further into the future as well. As such, Osborne would have been better to protect public health spending, even if this resulted in a slightly smaller settlement for the NHS.

Harry Quilter-Pinner is a Researcher at IPPR. He tweets @harry_qp