Impact of the mini-budget turmoil on the NHS?

It would be an understatement to say the UK government has seen a turbulent week following the announcement in its mini-budget that it would cut taxes by £45 billion in a bid to get the UK economy moving again.

Last Friday, the new Chancellor of the Exchequer Kwasi Kwarteng announced a mini-budget that set out a range of budgetary policies to boost growth in the UK economy. The fiscal statement outlined more than £45 billion of tax cuts and spending. This included energy costs, growth, infrastructure, employment, business and personal taxation.

After the announcement, the pound slumped to a record low and the Bank of England had to step in to buy billions of pounds worth of government debt in the form of bonds.

There are fears inflation and interest rates could rise faster than predicted as a result of the measures. In the past few days a number of mortgage companies have withdrawn products while they consider the impact on interest rates.

Many financial experts and analysts, including the the International Monetary Fund, warned that the tax cuts would likely increase inflation and inequality and called for a new plan to calm the markets. However, the Chancellor said today (Thursday) that the government was “sticking to the growth plan” despite the market turmoil.

So, what impact could this have on the NHS and the people that work there?

Healthy population is key to economic growth

The Royal College of Physicians (RCP) said that a healthy population is central to economic growth and the government needed to take action on the factors that keep people healthy in the first place.

Polling commissioned by the RCP on behalf of the Inequalities in Health Alliance found that 55% of people felt their health had been negatively affected by the rising cost of living – of those who reported their health had worsened, 84% said it was due to increased heating costs

Dr Sarah Clarke, president of the Royal College of Physicians, said: “The price of energy remains a concern for many people across the country. While it may seem strange for a medical royal college to comment on energy bills, we know that our health is the product of our environment, and the cost-of-living crisis is only another reminder of this.”

It is now urging the government to publish its Health Disparities White Paper by the end of this year as planned.

The British Medical Association (BMA) said that it was clear that the NHS has no place in the government’s plan to turn a ‘vicious cycle of stagnation into a virtuous cycle of growth’ and there was nothing in the measures to stop doctors leaving due to pay erosion or address the broken pension tax rules that are forcing doctors into early retirement.

Professor Philip Banfield, chair of council at the BMA, added: “It is the government’s continual failure to address both issues adequately which is driving the workforce emergency in the NHS.

“The Chancellor was scathing in his criticism that ‘militant trade unions’ should be prevented from ‘disrupting lives’. It’s beyond disappointing that he cannot see that years of real-term pay cuts have led public sector workers across the country to take steps towards industrial action. While we await more detail on the government’s proposed changes to trade union legislation, anything that prevents unions from acting in the interests of members will be strongly resisted.”

Health and Social Care Levy reversed

Amongst the measures was the announcement that the Health and Care Levy would be reversed. However, the Chancellor said that the ‘funding for health and social care services will be maintained at the same level as if the levy was in place’.

Health leaders welcomed the news that NHS and social care services did not feature among the government’s barrage of tax cuts. But many felt that with sky-high inflation and the soaring cost of living eroding the NHS’s budget, maintaining funding at existing levels would not be enough.

The NHS Confederation said that the details remain unclear, but the approximate £2 billion the Treasury had allocated for the NHS to pay for their own employer National Insurance contributions to the new levy, will be reallocated. Part of this money will go towards the new £500 million Adult Social Care Fund announced last week by the new health secretary Thérèse Coffey.

It estimated in its analysis that the NHS would need at least another £4 billion to get it back to the funding levels pronounced at last year’s Spending Review, and this represents the first drop in funding in years.

Matthew Taylor, chief executive of the NHS Confederation, added: “Health leaders will feel very underwhelmed and worried by the implications of this fiscal announcement. They will appreciate the Chancellor’s confirmation that spending on health and care will not be reduced following the scrapping of the national insurance increase and planned levy.

“However, in the context of rising inflation levels and the pay award not being fully funded, the NHS simply needs more investment to stay afloat and fully meet the needs of its patients. There is a yawning gap which is leaving the NHS in a perilous position as local leaders will either have to cut back patient care or accept that waiting times will continue to lengthen.

“Elsewhere, while we welcomed the £500 million adult social care discharge fund, big questions remain about where exactly this funding will come from. The NHS’s finances are too tight to be in a situation where we are robbing Peter to pay Paul. All of this leaves a number of unanswered questions on NHS and social care funding that will need to addressed in the Chancellor’s medium term fiscal plan.”