Budget confirms £10bn funding commitment

Five pound note

Spending on the NHS in England will increase by £10 billion per year in real terms by 2020/21, the Chancellor has confirmed.

Delivering the summer Budget to Parliament on Wednesday (8 July), George Osborne confirmed the Government’s commitment to fully funding the Five Year Forward View, providing £8 billion a year by 2020 on top of £2 billion already committed in the Autumn Statement.

The funding commitment came alongside an announcement of continued public sector pay restraint of 1 per cent per year for the next four years.

Welcoming the funding commitment, NHS Confederation chief executive Rob Webster said: “As highlighted in today’s Budget document, the £8 billion needs to come in staged increases and we would emphasise this should reflect the bigger cost pressures expected in the first half of this Parliament.”

“There is an opportunity for a multi-year funding deal to be aligned with planning in the NHS, for example around pricing, contracting and allocations. Through NHS Employers, we will look at the impact of the Budget on our workforce.” 

Key announcements

  • A new national living wage of £9 per hour by 2020, starting in April 2016 at £7.20.
  • Income tax allowance threshold raised to £11,000 next year and to £43,000 for higher rate tax.
  • 3 million more apprenticeships to be created, with an apprenticeship levy placed on large firms. NHS Employers is investigating what this will mean for the NHS.
  • Pensions annual allowance tapered to a minimum of £10,000.
  • Green Paper published on proposals for changes to pension saving system.
  • Further powers around public services devolved to Greater Manchester, including children’s services. Similar plans in discussion for Sheffield, Liverpool and West Yorkshire.
  • Youth obligation for 18- to 21-year-olds to earn or learn. Automatic entitlement to housing benefits abolished for this age group. 
  • Household benefits cap reduces to £23,000 for London and to £20,000 for the rest of the country.
  • Free childcare up to 30 hours per week for three- and four-year-olds from September 2017.
  • Tax credits and Universal Credits limited to two children for new claimants from April 2017.
  • Working-age benefits frozen for four years, maternity and other statutory pay is excluded from the freeze.

Social care

Mr Webster said the additional funding will also need to account for investment in transformation, “to support double-running and other costs that will be needed to move to new models of care.”

“What cannot be forgotten though is the impact that social care cuts are having on the NHS. We need urgent action to look at how we address the gap in social care funding, currently estimated at £4 billion by 2020." 

‘A sustainable settlement’

He added: “We also look forward to continuing to work with the Treasury and the Department of Health in addressing these urgent questions as part of the spending review due in autumn. 

“Through this process we hope to secure a sustainable settlement for health and care, which allows our members to get on with the bigger challenge of delivering change in service delivery, to better meet the needs of people in the 21st century."

Find out more

Find out more on the NHS Employers website and view the Budget in full on the HM Treasury website.

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