Chancellor Rachel Reeves delivered her spending review as NHS ConfedExpo took place in Manchester. There were headline grabbing sums of money for the health service and digital and tantalising hints of a new operating model for the NHS. But what was the detail? What was the reaction? And what are the implications for health tech?
NHS funding:
Chancellor Rachel Reeves announced the outcome of the Treasury’s spending review last Wednesday, and set out the funding that Whitehall departments, public services, and public projects can expect over the coming three years.
In headline terms, housing, defence and the NHS were the big winners, with Reeves announcing an additional £29 billion for the health service or an average real terms increase of 3% per year. However, commentators noted there is less to this than meets the eye.
First, the increase has been calculated from a baseline of 2023-4, rather than from the end of the current two-year spending settlement, so that “average of” 3% is worked out over five years, not three. This means it doesn’t build on the extra money the government found for the NHS in 2023-4 and 2024-5.
Second, the Nuffield Trust has calculated that initial two-year boost has already been absorbed by inflation, pay pressures, rising demand, and waiting list commitments, so the NHS is looking at a funding gap of £1.3 billion this year.
NHS England action to close the gap, plus an existing demand for efficiency savings, is triggering big staff and cost reduction programmes at trusts. These are unlikely to let up, as the Treasury expects the NHS to deliver further productivity savings of 2% a year for the next three years, or £17 billion.
Third, the increase is below the long-term trend for healthcare spending in the UK; and less than half the year-on-year increases that New Labour found for its rescue and reform programmes in the early 2000s. And back then, the public finances were in better shape.
This year’s spending review will see cuts at some departments and freezes at others. Local authorities have been told to look at raising council tax, even though many are staring at bankruptcy, not least because of the cost of social care, which has been kicked out to the Casey Commission.
This means they’re unlikely to be able to invest in discharge, prevention, and public health initiatives that might improve flow and reduce demand in the NHS. Even if “hospital to community” and “treatment to prevention” are two of the three shifts in the 10 Year Health Plan, now expected in early July.
Overall, the message for health tech suppliers is that the NHS has done well in comparison to other public services, but the additional funding is unlikely to create much “headroom” for reform. Instead, the financial situation continues to look “very difficult,” limiting the scope for new implementations, unless they can be shown to improve productivity.
Reaction:
The spending review received a muted reaction from think-tanks and representative bodies. Matthew Taylor, chief executive of the NHS Confederation, which was holding its annual conference in Manchester as Reeves was speaking, said the extra funding would not be enough to do everything the government wants to do and “difficult decisions will have to be made.”
He was particularly concerned about Reeves’ decision to hold the NHS capital budget flat for the next three years, when new facilities will be needed to deliver new models of care. He urged the government to look again at finding new ways to get private investment into the sector.
In a similar vein, Nuffield Trust senior policy analyst Sally Gainsbury argued the government had done what it could for the NHS when it was “boxed in by anaemic growth and little appetite for further tax rises.”
But she warned that in the context of pay demands, a growing drugs bill, and “all the promises made… to drive down waiting lists, shift care closer to home and rapidly improve tech” the settlement “soon melts away.”
She urged the government to be clear in the 10 Year Health Plan “what its priorities are for health and where there will be compromise”; and not to forget about the impact of wider spending (or otherwise) on benefits, housing, and social care.
The King’s Fund expressed some puzzlement about the decision to announce the NHS funding envelope before publishing the plan that will, presumably, say what it expects the service to do with the money.
“They must know that it is not enough to achieve all of the ambitions in their manifesto,” argued director of policy, events and partnerships Siva Anandaciva, “but at the moment, the trade-offs are still too coded to see.”
New NHS structures:
Back at ConfedExpo in Manchester, health and social care secretary Wes Streeting summed up by saying there had been “two responses” to the spending review. “From the media and the public: ‘£29 billion, that’s a lot of money.’ And from our friends in the think-tanks: ‘£29 billion is nowhere near enough’.”
He argued both were right, but the NHS “shouldn’t just focus on the 3% but on the 100%” – or on its total funding and how to spend it effectively. He said reform would be critical to doing this. And while he naturally didn’t commit to making trade-offs, there were hints at the event of what may be coming in the form of a new operating model for the NHS.
Speaking the day before Streeting, NHS England ‘transition’ chief executive Sir James Mackey indicated this would include new organisational forms. Although he acknowledged that it had happened “in a rush,” he said a start had already been made with the abolition of NHS England and the decision to consolidate integrated care boards from 42 to 27.
As the changes go through, he added, the leadership of the NHS will be trying to “move away from overly central control” and to create space for local areas to do things differently. Although there will be limits.
Sir Jim talked about the return of national service frameworks to define what services should look like for specific clinical areas, and policies to keep a grip on the money. He also talked about the return of “earned autonomy” or freedoms for organisations that perform well; and penalties including “take-over” if they don’t.
The hey-day of earned autonomy was the last Labour government, when it gave rise to foundation trusts. Sir Jim speculated that his audience probably missed those days, and said FTs will be coming back. Although this time they will not be answerable to their own regulator, but to their local NHS regional office.
And they will be expected to work with – or even vertically integrate with – other parts of the system so they can focus on outcomes, deliver “left-shift” policies and population health management (HSJ analysis). New providers also look likely at “neighbourhood” or c.100,000 population level, to sort out public frustration with access and duplication.
Health tech suppliers are likely to find themselves dealing with a new set of NHS structures, and so a new set of customers, in a few years. A merged Department of Health and Social Care/NHS England will retain a powerful voice on finances, targets and priorities, working through its seven regions, but there will be opportunities in technology to support its service frameworks and national programmes.
Meanwhile, the provider landscape looks set to be transformed, which should mean new customers looking for systems that will enable them to manage the span of their operations effectively; and probably to adopt AI to streamline workflows and reduce their administrative burden.
A digital first NHS?
The hints about a new NHS operating model that came out of ConfedExpo suggest it will not just include new structures, but a new way of working that makes much more use of digital technology. Wes Streeting said there would be “radical implications for the service” with “more care delivered on the high street, digitally, and through the NHS App in ten years’ time.”
The NHS has already made some moves in this direction, with the introduction of online triage, text, phone, and video consultation for GPs, the roll-out of community diagnostic centres, incentives for GPs to ask for ‘advice and guidance’ before referring patients to secondary care, the introduction of virtual wards, and the steady expansion of patient initiated follow up.
However, it looks as if the vision will be to igo further. Over the weekend, the Health Service Journal was told that the 10 Year Health Plan will propose “virtual hospitals” or a “major overhaul and expansion of the advice and guidance model” that will enable GPs to use a new digital platform to work with consultants, anywhere.
With an eye on tabloid pick-up, “a well-placed source” described this as “Uber for consultants.” Back at ConfedExpo, Sir Jim urged his audience to consider “tearing up” outpatients and to use technology to remove “multiple touch points” and duplicated work.
Around the event, journalists have been fed a steady stream of releases about the NHS App. Broadcasters and papers have reported that more patients will be able to book appointments, receive push notifications, and sign up for clinical trials (even though these developments have already been announced, sometimes more than once).
Ten billion pounds for health tech
In the spending review, Rachel Reeves announced that she would be “supporting the shift from analogue to digital with a total investment of up to £10 billion in NHS technology and transformation by 2028-9.” The Treasury claims this is an “almost 50% increase from 2025-26.”
Siva Anandaciva from the King’s Fund noted it is very hard to judge the reality of this claim, since “there is next to nothing in the public domain on what the official ‘NHS technology budget is’.”
As the Highland Marketing advisory board has noted, even national spending commitments are hard to track, and big tech projects tend to be launched with much fanfare, but then quietly scaled back or axed to meet “frontline” pressures.
At Confed, Wes Streeting said this will not be happening in future. But it’s still unclear whether the £10 billion will all be new, capital spending, or a mix of capital and revenue, or what the local contribution will be, or how the money will be distributed over three years, or how it will be spent.
The Treasury’s official documents flag just two commitments: expanding the NHS App and creating a single patient record. Yet there are plenty of other tech programmes in flight that will soak up cash, including Frontline Digitisation and the roll-out of the Federated Data Platform.
Plus, there are questions to be asked about the value of a single patient record, a pet project of the Tony Blair Institute for Global Change, even if such a thing can be created: which, as longstanding digitalhealth.net editor Jon Hoeksma has pointed out, is far from a given.
The Treasury’s commitment to put money into health tech is welcome. However, as with the spending review’s funding announcements generally, there are questions about how the money will be structured, and whether it will be enough to do everything the government is starting to say it wants it to do.
Also, the government’s New Labour and think-tank advisors like big, national programmes and one or two supplier implementations, which will make it important for vendors to be aligned with their priorities.
However, the drive for a digital first NHS should provide many new opportunities for innovative ideas, particularly if new, integrated foundation trusts and neighbourhood providers are given incentives to shake up existing models of care and the government remains committed to a vision of a ‘digital first’ NHS.
What do the spending review and a new NHS operating model mean for health tech marketing and PR? What should you be doing to make sure you’re aligned with the market, leading the debate, and ready to work with new customers and innovators? For our thoughts, head on over to our latest blog.
