Commitment to moving more care away from hospitals questioned as analysis reveals real-terms funding cuts to key services

A new analysis of day-to-day funding for NHS services shows that successive governments have not put their money where their mouths are to meet much-touted ambitions of moving more care away from hospitals.

The analysis published today by the Nuffield Trust shows that when accounting for inflation (in real terms), total funding for NHS-run patient care services has increased by 3.1% a year over the past six years, but this increase has not been applied equally to different sectors.

While acute, ambulance and NHS mental health services have seen real terms increases, overall funding for NHS community healthcare services ^[1] has grown much more slowly, at only 0.5% per year since 2016/17 or 3.2% in real-terms over the entire period. Some services – dentistry, public health, and prescribing - have seen real-terms cuts to their budgets over this time.

The picture is even more stark once these figures are adjusted to take account of healthcare need, to reflect our aging population (known as “needs adjustment”) ^[2]. Needs-adjusted spending on NHS community health services in 2022/23 was 4.2% below where it was in 2016/17, meaning those services received £6 less per person in 2022/23 - when demand for their services is taken into account - than they did seven years ago.

For dentistry the drop is 20% over time or the equivalent of a drop of £11 per person when adjusted for need. Local authority public health spending – which buys vital services like health visiting, school nursing, and promotion of good health - has been cut by 24% per person during this time, equivalent to a cut of £15 per person.  Meanwhile, funding for mental health care, which has grown most significantly per person when adjusted for need, was £43 more per person, all stated in 2016-17 prices.

The analysis of NHS funding by care sector is drawn from the detailed annual accounts of all 212 NHS provider trusts, supplemented with information from NHS England’s and the Department of Health and Social Care’s annual accounts. It is published as part of an update to the Nuffield Trust's Health and care finance tracker funded by the Nuffield Foundation and calls into question the commitment to moving care closer to people’s homes, a key plank of policy over the past decade.

Of the nine NHS service funding lines examined in the analysis ^[3]:

• Four experienced average annual real-terms increases over the period - acute services (4.4%) mental health (5.3%), ambulances (5.2%) and GP primary care (3.3%)
• Three experienced average annual real-terms cuts: public health (-3.9%) dentistry (-2.2%), ophthalmic and pharmacy spend (-2%)
• Two were broadly flat: community services (0.5%) and prescribing ( –0.5%) on average each year over this period.

The analysis also shows that:

• When healthcare need is taken into account, the Nuffield Trust reveals that overall funding per head rose by an average 2% real terms a year over the period and fell by 2.2% between 2021-22 and 22-23 as a result of the rapid post pandemic funding slowdown.
• Community services spending was cut in real terms in three out of the six years between 2016-17 and 2022-23 and that average real terms funding growth for this sector reduces to just than 0.05% a year over the period if the impact of central funding for a one-off covid related pay bonus for staff in 2022/23 is excluded.

Nuffield Trust Senior Policy Analyst Sally Gainsbury said:

“For over a decade, policymakers have rightly claimed that if the NHS is to be more than a sickness service, we need to develop and boost services that actively keep people out of hospital by managing long term conditions in their homes and preventing illness and chronic health deterioration. Only by investing in care in our communities – whether district nursing, health visiting, or speech and language therapy – can we really hope to address the many challenges presented by an ageing population and widening health inequalities.

“But our analysis reveals that the opposite is true when it comes to how much money is being invested in different forms of healthcare, with striking falls in needs-adjusted spending per person in key community and primary care services. Quite simply successive Governments have cut back on the very services that are needed to support the ambition of moving care out of hospital.

“These trends are not an accident: when the chips are down, it’s the blue-light emergency services that swallow up what funding is available for healthcare in straitened times. Whoever forms the next government will have a mountain to climb to reverse this trend without detracting from the very real spending pressures in acute care".