It is pleasing to see the Prime Minister is thinking about the big picture and moving away from the annual ‘top-up’ approach to funding, which plainly isn’t working. Since 2010, the health budget has grown one per cent a year on average, while annual increases sit at around four per cent since the NHS was established. A plan that maps spending requirements for the next 15-20 years, rather than five, is required.
Aspirations to building political consensus on improving productivity and efficiency are also crowd-pleasing notes to strike.
But if the recent crisis has taught us anything, it is that the NHS and local government’s social care provision are inextricably linked.
And there are strains on the funding models on both sides that will need to be addressed. The NHS continues to face unrelenting pressure from rising demand, compounded by what has been a particularly tough winter. This is only going to get tougher – current funding and workforce issues mean the next decade will present further, deeper challenges to address.
Meanwhile, local authorities – the Key Cities included – have had to live with a 26% real-terms reduction in their spending power over the last eight years, while at the same time responded to a surge in the volume and complexities of care and support that we provided to our communities.
This is made worse by the fact that the local government finance system has evolved in a piecemeal way since the wide-ranging reforms that we introduced with and after the poll tax (to provide a single flat-rate per-capita tax on every adult at a rate set by the local authority) in the early 1990s.
The system puts too much pressure on council tax payers, while leaving limited discretion for councils on how they are to raise funds.
In the health and social care context, the 2011 Commission on Funding of Care and Support (the Dilnot Commission) presented some sensible ideas to address issues at a local level, particularly reducing the postcode lottery for care services. A recent Which? Survey found that regional variation means patients can be 25 times more likely to have their care services costs covered by NHS funding, depending on the area of the country they live in.
Reducing this would establish a national threshold for care eligibility, meaning there would be one level of eligibility across all councils to remove the critical issue of local variability that continues to exist.
This approach would then present a solid challenge to central government to provide an equitable level of support across the country to ensure this national standard could indeed be met at a local level.
It is this challenge that must be tied to the PM’s recent remarks on NHS funding, and the growing debate about hypothecated, ear-marked or ring-fenced taxes to address our national health and care needs.
So let’s start a real debate about local government funding in this context. It’s evident that the current funding model is in urgent need of reform.
The Layfield Committee (1976) was the last high quality review of local government finance in this regard (and was at that point the first since the Kempe Committee inquiry of 1911 to 1914), taking in over 1,000 items of evidence and fact finding visits to other European countries to observe different systems of local government. Something of a similar depth of consideration and quality is required today.
It’s absolutely crucial that this new central review addresses local government finance, including potential for hypothecation and reform of business rates.
A proper consultation process, drawing on the expertise of mid-sized cities towns and cities in the UK, is essential to conducting this effectively, taking advantage of their economic resilience and ability to adapt rapidly. This will allow all parties to work together and deliver a progressive, integrated health and care service that succeeds at both a local and national level.
Peter Box CBE is Chair of the Key Cities group of 20 mid-sized cities.
