Health and Social Care Committee
Oral evidence: Implications of the Budget for health and social care, HC 1712
Tuesday 27 November 2018
Ordered by the House of Commons to be published on 27 November 2018.
Members present: Dr Sarah Wollaston (Chair); Luciana Berger; Mr Ben Bradshaw; Rosie Cooper; Diana Johnson; Johnny Mercer; Andrew Selous; Derek Thomas; Martin Vickers.
Questions 102 - 122
Witnesses
I: Rt Hon Matt Hancock MP, Secretary of State for Health and Social Care; and Sir Chris Wormald, Permanent Secretary, Department of Health and Social Care.
Witnesses: Matt Hancock and Sir Chris Wormald.
Q102 Chair: Thank you very much for staying on, Secretary of State. Have we given you time to draw breath and get into a different space?
Matt Hancock: Yes. I have almost refilled my water glass.
Q103 Chair: This is to follow up some points about the Budget. As you know, the Budget document shows that Department of Health and Social Care resource DEL funding is set to fall by around £900 million in 2019-20. We would like to press you on where that is coming from and the impact it will have on how you can plan the 10-year plan without knowing what is going to happen to public health budgets, training budgets and capital budgets. Obviously, the money has to come from somewhere. We would like some clarity from you on where that money is coming from next year.
Matt Hancock: The Budget did not change the resource allocations for next year, other than to increase them with respect to the money going into adult social care. Then, of course, there is £20 billion for the NHS on top of that that comes in from April.
If I can explain, the underlying position for the Department was set in the 2015 spending review. Further details of that were made clear in the Budget because the Budget Red Book for the first time split the NHS settlement from the rest of the Department settlement, but those were all changes that had already been factored in. For instance, the Department had undergone a very significant downsizing before I arrived, to ensure that it hit its admin budget. There were no changes to that in the Budget. I know there has been significant debate around this, but there were no changes in the departmental position.
You asked about the spending review. Of course, the NHS budget settlement was settled in the summer with the £20.5 billion extra in real terms over the next five years, which you might have heard about. The cash budget for NHS England was set in the Budget Red Book. The other settlements are a matter for the spending review.
Q104 Chair: Can I ask it another way? In the past, uplifts to the NHS England budget have been funded partly by transfers from public health budgets and Health Education England budgets, and there have been capital to revenue transfers. Can you say to this Committee categorically that there will not be any transfers out of public health grants and out of Health Education England, as there have been in the past?
Matt Hancock: That is not our intention. Part of the reason for putting in place the extra money, going up so sharply from £114.6 billion to £147.8 billion in 2023-24, is to ensure that the NHS can be sustainable for the long term.
Q105 Chair: Right. You say it is not your intention.
Matt Hancock: Yes.
Q106 Chair: When you release the 10-year plan, next week as I understand it, is that taking account of any change to Health Education England budgets? Are you expecting any cuts to Health Education England budgets?
Matt Hancock: No. We have to make a planning assumption because we do not have an agreed spending review. The vast part of the long-term plan, of course, is about how to spend the almost £150 billion that is going into the NHS over the next few years per year. Of course, there are some links to the other budgets, but, in the core, it has been given its settlement.
Q107 Chair: It is just that, when you look at the Budget Red Book, there is obviously a discrepancy of £900 million between the two figures, isn’t there—the uplift to NHS England?
Matt Hancock: No.
Sir Chris Wormald: As the Secretary of State was saying—
Q108 Chair: Can you set out for those who are very concerned about this exactly why there is that discrepancy and where it is coming from?
Sir Chris Wormald: Yes. There is not a discrepancy. It comes from two sources. There is the playing out of the reductions that the Government made in spending review 15, of which this is one year, so those were already baked in. Then there are a few, essentially, accounting technicalities about where money is moved. There is no change to the underlying spending commitment to HEE or Public Health England.
Q109 Chair: What are the accounting technicalities? There is a big difference between the two.
Sir Chris Wormald: They come from two sources. One is around the capital revenue position, as you described, and the other is around when transfers to and from other Government Departments happen. That is about £300 million of the £800 million, and the rest is the playing out of spending review 15 in the way the Secretary of State described. There is no discrepancy in the numbers at all.
Matt Hancock: For instance, the 2015 spending review has a reduction in the departmental admin spend. That meant that under my predecessor there had to be a reduction in the headcount in the Department. That has happened. It is baked into the figures and it represents one portion of this. There has been speculation that it is due to an increase in pension charges, but that is not true.
Q110 Chair: It is separate.
Matt Hancock: That is not true because we are being recompensed directly by the Treasury for the increase in pension charges in the NHS.
Q111 Chair: I want to be absolutely clear that you are able to make your 10-year plan dependent on secure funding for Health Education England. You are not anticipating a further cut.
Matt Hancock: The cross-Whitehall assumption for the non-NHS budgets is flat real, and we are making an assumption of no cuts to Health Education England in the long term, as an underpinning assumption. That is not an agreed spending review position. It is the assumption we are using in order to write the long-term plan.
Q112 Chair: Flat real is your assumption for Health Education England.
Matt Hancock: That is not quite what I said, but—
Q113 Chair: Sorry. Just say it again then.
Matt Hancock: Flat real is the assumption across Whitehall, and no cuts is our planning assumption for Health Education England. There is a separate piece around Health Education England, which is really important, and will change the nature of that budget over the long-term plan period.
Health Education England has hitherto reported directly to the Department, and in future, for operational reasons, it will report to NHSI because we want the organisations that make up the NHS, the trusts and the rest, to be much more directly involved in deciding how the training budget is spent; big organisations ought to be training their own staff, rather than relying on a separate organisation. That is not a comment on the quality of work that HEE does, which has been excellent; it is just to make sure that the HEE assumptions are tied up with the needs of individual trusts. Trusts today spend money on training outside the HEE budget. It will make that funding more fungible over time, but, for the purposes of the £20 billion of the long-term plan, the HEE budget is outside the NHS budget; it is on the departmental books and will remain so for the spending review.
Chair: Thank you.
Sir Chris Wormald: On your wider point about making plans when you do not know what the spending review will do for HEE, while that is, of course, true, we are by this point talking about quite small numbers.
Matt Hancock: Small in NHS terms. It might surprise the public to define these numbers as small.
Sir Chris Wormald: Yes. The HEE budget is a bit under £4 billion compared with the £150 billion that the Secretary of State is describing. Is your planning assumption in terms of a small per cent of that budget really going to affect decisions about how you spend £150 billion? At the margin, yes, but at a very small level, so we think it is perfectly reasonable to be asking the NHS the question: what are you going to do with the resources you have? Yes, you will have to wait for the spending review for the exact numbers on our wider budgets, but that should not prevent us from being able to put together sensible plans for the NHS mandate money.
Q114 Andrew Selous: Can I press you a little on the pensions point? I am delighted to hear that the Department is getting additional funding in relation to the additional pensions costs. Was that a Department of Health and Social Care special carve-out or was it a cross-Whitehall policy? I am sure you are probably aware, Secretary of State, that there are issues around police funding at the moment and the issue of police pensions. I am curious as to how the Department managed to land that largesse from the Treasury on the pensions point.
Matt Hancock: I do not know. It happened before my time. It was not so much of an issue at DCMS.
Q115 Andrew Selous: Perhaps the permanent secretary can enlighten us.
Sir Chris Wormald: I do not know what happened with other Departments. I can go away and ask my Treasury colleagues and come back to you.
Q116 Andrew Selous: Would you write to the Committee and let us know what happened on the pensions point?
Sir Chris Wormald: Yes. Inevitably, I focused on the health position, I have to say.
Q117 Andrew Selous: If you are able to get that letter to us before 5 December, when the police funding settlement comes, it would be particularly helpful.
Sir Chris Wormald: I will ask my Treasury colleagues.
Q118 Mr Bradshaw: Given the priority that you have placed on prevention, Secretary of State, why are the public health services of local government going to be continually cut for the next few years?
Matt Hancock: That is not true. I have seen quite a lot of noise about this. I was asked about it in questions downstairs. The 2015 spending review position is playing out, and then we have to settle the spending review for the years ahead. There is one more year of the spending review to play out.
Q119 Mr Bradshaw: One more year of cuts.
Matt Hancock: There is one more year on the trajectory set in 2015. Of course, prevention is about public health, but it is about much more as well, and about how the public health budget is spent too.
Q120 Chair: The main question I had was about how you can plan for the future for your 10-year plan, but also bring in social care. Is it still your intention to publish the Green Paper this year?
Matt Hancock: Yes. It turns out that there are quite a lot of other things going on, but it is my intention to publish this year.
Q121 Chair: Thank you. Is it still your intention to publish the 10-year plan next week?
Matt Hancock: No. It was never scheduled for next week. We will publish that before the end of the parliamentary term as well.
Q122 Chair: Will they be published simultaneously, given that we are running out of time?
Matt Hancock: Our current plan is that both will be published before the end of the year.
Chair: Thank you.
Matt Hancock: I would love to say more, but no final decision has been made on that.
Sir Chris Wormald: For completeness, we of course gave the NHS a very clear planning assumption around social care, which was that, whatever the social care settlement was, it would not produce additional burdens for the NHS. That is the planning assumption they would use in the creation of the 10-year plan.
Chair: Thank you. Thank you, Secretary of State.