What Mr Hammond didn’t really say in the Autumn Statement but actually said very clearly

 

Well, at first glance the Autumn Statement could perhaps better be described as a ‘sentence’ more than a statement, already a word that has two very distinct meanings. Firstly, it was incredibly short and almost devoid of anything that you might consider significant. Secondly though, and perhaps more pertinently, it condemned Government organisations to a set of fiscal plans that we have had for some time and which most believe are causative of what can only be described as an acute cash crisis in the NHS. All that said, the lack of change to existing departmental financial plans was not the most interesting piece of news. There was something much more significant.

 

No More Money

No more money is no more than I expected and it is very significant in its implications but is far from the most significant announcement made. We’ll come to that. However, no more money is just that, in cash terms, we have to live with what we have and the increases planned already in the previous Autumn Statement. You will recall that this delivered an increase in budget of around £4.5bn in real terms but in reality half of that was added into this current financial year and most of that had already been taken away through things like Employers National Insurance contributions and Better Care Fund. You can see the progression (lack of) in the King’s Fund graph.

nhs-budget-kings-fund

The NHS budget and how it has changed, King’s Fund, January 2016
https://www.kingsfund.org.uk/projects/nhs-in-a-nutshell/nhs-budget

 

Of course, the increase in NHS spending wasn’t the only fiscal change that happened last year and certainly not the one that was likely to have the most future impact on the NHS (the effects of which we need to understand to consider the 2016 Autumn Sentence). The biggest change in impact terms came from the reduction in Local Authority spending, which impacts social care funding, along with the introduction of the Living Wage, which added further pressures to the providers of social care. This is hugely significant for us. When social care falters, the NHS ends up with the work, an effect we are seeing in three main ways:

  • Increased admissions, especially through Accident & Emergency
  • Delayed transfer of care (DToC)
  • Greater levels of frailty within the NHS care spectrum

The DToC issue can be seen very clearly from the Quality Watch indicator of the same name (http://www.qualitywatch.org.uk/indicator/delayed-transfers-care), which all should be monitoring on a regular basis as an indicator of social care system health. The indicator lags a teeny bit but the actual days lost are reported monthly by NHS England and commented on by Rob Findlay and HSJ almost as soon as they are released. According to performance statistics released for September, 196,246 delayed days occurred in the month, compared to 188,340 in August. That made September the worst month since records began 6 years ago, topping the previous worst month – August! The immediate effect of this is to delay elective surgery, the knock-on effect of which is seen in the failing RTT rates and the rapidly worsening financial position of many Trusts.

 

dtoc

Quality Watch Indicator: http://www.qualitywatch.org.uk/indicator/delayed-transfers-care

 

Why is this interesting in the context of the 2016 Autumn Sentence?

We cannot consider the Autumn Sentence in isolation of the environment in which it sits and it is only made meaningful when we consider policies and plans already in motion. The true uncomfortable reality is that we have an absolute collision of issues:

  • Increasing population numbers, life-span and proportion of elderly, leading to…
  • Collapsing social & primary care, leading to…
  • Significantly increasing NHS demand, coupled to decreasing efficiency due to DToC issues and more

An analogy I will often use is that of New Orleans, where in the City of New Orleans, the storm surge from Hurricane Katrina caused approximately 23 breaches in drainage canals, navigational canal levees and flood-walls, resulting in the near complete flooding of the city. In our case, those levees are Social Care (first line of defence) and then Primary Care (last line of defence for the Acute Sector). When they go, they will go with a surge that I believe we are seeing now and which will accelerate sharply.

Many predicted that the Treasury would have to come to its senses. Surely it would see that the NHS was at breaking point, along with social care, itself attested to by many an impassioned plea this last week. My prediction, spot on as it turned out, was that there would be no more money. I would have put money on no more money. But why the high degree of certainty? Well, you cannot give what you do not have and when every sector is under pressure and most have been cut more than the NHS, you have nowhere to take it from. You cannot give what you do not have. Add to that worsening national finances, rapidly increasing debt as a proportion of GDP and a predicted decline in GDP growth and you have a perfect storm. It’s a storm that leads to the most significant piece of news in The Autumn Sentence.

 

No More News

The single most significant piece of news was the announcement of no more news. Really? What do I mean? The Chancellor shifted the Autumn Statement from the Autumn to the Spring, with the next one scheduled for 2018, followed by a Budget shift to Autumn 2017. That means, no financial plan changes for a year. Or… regardless of what is happening to the NHS, there is no scheduled reset until at least Autumn 2017.

Why?

The official line will unfold as mostly to do with Brexit and needing greater certainty about economic prospects before any major shift in policy. I have ‘some’ sympathy with that. However, the adult response would be to have more regular reviews, not less, just in case things weren’t going according to plan. However, I suspect the unofficial reason is that Mr Hammond, on the back of doing nothing to anything this Autumn, now has a full twelve months where he does not have to stand up and face the impact of current circumstances or policies. He’s gone into fiscal hibernation, hoping to wake up in, ironically, Autumn 2017.

Without any leaning for or against, we have to acknowledge that Brexit is having real effects, even though we have not yet Brexited. As it stands today, the fall in the pound is already starting to have a significant effect on inflation. So, the NHS will suffer increased costs, probably equivalent to an average annual CIP target, on top of its annual CIP target but on no more money. EU Ministers are insisting on a ‘Hard’ Brexit, which means it is highly unlikely we will have open access to the EU whilst enjoying control of our borders and reduced contributions. I can’t think of a single reason why EU states would agree to that when in effect that very scenario effectively removes the need for any state to remain a member. The reality that trade will be affected is captured in reducing growth forecasts, as well as reduced tax receipts (as businesses limit pay increases and absorb inflationary pressures, leading to a reduction in profitability and thus a reduction in Corporation Tax without an increase in Income tax). The Treasury is trying to compensate by increasing exports (on which he made helpful announcements) but we cannot escape the fact that we are a small island with comparatively few natural resources and so we are ALWAYS going to import more than export and whatever we manufacture for export is itself affected by the pound-mediated inflation effect on raw materials, which we import before turning them into gizmos for export).If you are the Treasury, it represents a big problem. How do you cope with:

  • Existing commitments already far in excess of income (and worsening)
  • Reducing taxation income
  • Already overwhelming levels of national debt
  • Increasing costs
  • Services collapsing under the effects of budget restriction?

Well, if you can’t do anything about the problem, you can at least do something about facing it – HIDE – or in Autumn Sentence terms, move the Autumn Sentence to the Spring… of next year but one, allowing you to move the Budget to Autumn 2017. That’s a year in fiscal hiding, during which we go through Winter Pressures on the back of summer performance that has been worse than almost all recent winters, a significant hike in inflation and very little real terms increase because we had most of it this financial year (half the £4.5bn and we blew that out of the water with an underlying deficit of around £3bn, causing a raid on the family silver in the form of Capital-to-Revenue trickery).

 

The Meaning in Human Terms

In the space of an article, it is impossible to convey the complexity of the situation or the full impact of current policies and budget trickery. However, we do have to consider the collective impact on the people, struggling to deliver front line services, now faced with no respite and arguably a more rapid rate of decline. Let’s put it in stark terms. How bad does it currently feel? What’s the direction of travel? Now let’s add what we now know:

  • No change in the direction of travel
  • Certainty in the above until at least Autumn 2017 (although it could worsen)
  • No extra support for Social Care, which is collapsing, leading to Primary care overwhelm, leading to NHS overwhelm
  • Insufficient funding for the STP transformation process (third of what’s needed, at very, very best – openly stated by NHSI/NHSE)
  • Unquestionable hike in costs due to a reduction in the pound increasing inflation
  • ALL main quality & performance indicators going in the wrong direction

Now, how bad will that feel 12 months on? What will that mean to you, personally?

I am deeply concerned about the effects of current circumstances, system decisions, system behaviours and Trust responses on front line staff. The incessant more for less is explainable but not sustainable in human terms and certainly not acceptable. It will turn an accelerating rate of decline in performance and quality into a tsunami of problems, all of which land back in the hands of front line staff. There will be a tipping point, in the most adverse of ways. My concern is that we are nearing that tipping point. That’s not ‘talking down’ the NHS. It’s a data-driven and real life, evidence-based extrapolation of EXACTLY what is already happening but nobody wants to acknowledge because of its personal implications. Just like the Chancellor, it’s easier to discount the message, possibly also shoot the messenger and then go hide. It doesn’t change the circumstances though, or their implications.

I have advocated a specific thought-process for many years. I call it a truism because it’s pretty incontestable. It goes like this:

  • How this (life, career, services etc) turns out (the outcome, for you) depends on the decisions and actions you take i.e. what you choose to do (or not do)
  • But the decisions and actions are based on how you think and feel, along with how well you manage your crocodile and limbic processing that so undermines ‘thinking’)
  • Your thoughts and feelings are heavily influenced by how well you understand what’s happening, in real terms, not based on biased opinions

I suspect that it is more important than ever to really understand, objectively, what’s happening and where it’s going, so you can acknowledge any evident implications and DO something about them rather than just allowing them to unfold. Or you could just make like the Chancellor and simply hibernate for a year and see what life looks like then, assuming the tsunami miraculously missed you. To me, that feels just a touch leaving things to chance when the odds are so massively against you and the data is so consistent.

3 responses to “The Autumn Sentence

  1. Dear Andrew,
    What if all the efficiency changes which have led us to our current state of being (with more efficiency changes being asked for) are not responsible for any of the CIP’s being achieved. What if they have all hidden the real reason why we have until recently been able to meet cost improvement targets and now cannot?
    I wonder if all the improvements have actually been down to enhanced recovery which started in 2007 and is now universally applied. The application of this was almost complete 2 years ago. Since then the annual deficit for trusts has gone through the roof despite their best efforts. Enhanced recovery reduced length of stay massively and therefore increased available beds without the need to increase the bed numbers. This may have allowed all improvements which were however attributed to other plans.
    If this is true and the plans had no effect on the improvement then more planning will also have no effect since enhanced recovery was a one off bonus. This explanation would fit with our situation. I welcome your thoughts.

    1. I think you raise some very good points. To add weight to this, we have only seen one year in which we achieved a significant productivity improvement (around 2.8%) followed by two more recent years each seeing a decline of about 1% despite an apparent cost improvement. I think we constantly confuse cost versus productivity improvement. Enhanced recovery would positively affect the latter but many of the measures and plans we see are more designed for the former. My true fear is that in the race to reduce cost, we damage productivity, which then adds to cost and creates greater latent demand as throughput falters. Many measures are also undermining quality, which comes with its own downstream negative effects. We are also starting to use accounting measures to make the books look better and calling it ‘improvement’ when it does nothing to affect the underlying performance and in many cases just reduces future investment and transformation.

      So, in direct response, I don’t think ‘all’ the improvements have been down to enhanced recovery but suspect it is a major contributor to the ‘right’ type of improvement. I do agree that in the absence of much more work to be done in that domain, along with the absence of much resembling solid productivity improvement, we are on very shaky ground. Shaky, because NHSI et al has imposed unbelievably austere financial control targets that Trusts have really no chance of hitting (and the headlines are just starting e.g. Nottingham) and as the Autumn Statement has declared, there’s nothing in the pot to pay for disappointment. At the same time as no financial plan B, we see every operational performance target slipping too, with the obvious implications for quality/outcome too.

Leave a Reply

Your email address will not be published. Required fields are marked *