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The Government Has Been Caught Raiding Capital Budgets Again

In the run-up to the NHS' 70th birthday, Theresa May announced that the health service would be receiving a real term funding increase.

Beginning in 2019/20 and ending in 2023/24, the NHS was to receive an extra £20.5bn per year.

As welcome as the news was, especially in light of the fact that the Conservatives, first in partnership with the Liberal Democrats in the 2010 Coalition government and then under David Cameron and Theresa May, had subjected the NHS to the longest spending squeeze in its 70-year history, the funding announced simply was not, and is not, good enough.

In the wake of Theresa May's announcement, experts from the Kings Fund, Nuffield Trust, Health Foundation and the Institute for Fiscal Studies all lined up to make the case that  if the NHS was to keep peace with the challenges that an ageing population and the future was to pose, that it was essential, that the NHS receive a real term increase of 4%.

This was the figure all experts agreed was necessary, as a bare minimum, to keep the health service afloat. Not the 3.4% the government had committed to.

But this wasn't the only problem, the money announced by the government in this 5 year funding settlement skirted around a series of elephants in the room.

For a start, there was no mention and no commitment made to provide social care with any extra funding. Yet the impact that social care has upon the functioning of the NHS cannot be overestimated.

The routine spectacle of winter crises are just one of the symptoms of how the gutting of social care - a gutting which has resulted in there being less care packages available - leads to the overcrowding of A&E departments during the winter months. Which in turn can lead to serious injury, and in some cases death.

But this time, the government's intransigence when pressed to commit to extra funding for social care, arguably hit a new low in light of the fact that the budget for adult social care has been slashed by £7bn since 2010.

But, through the cacophony of these criticisms, activists and experts were also warning that the government could not continue to shirk its responsibility to adequately fund the NHS' capital budget.

In the NHS, capital expenditure refers to essential investments in medial equipment, whether that be equipment ambulances or operating tables, as well as to estate facilities, these  facilities including the maintenance of buildings and other essential infrastructure, such as information and communication systems.

Yet, since the Conservatives came to power in 2010, the NHS has had its capital budget raided on a yearly basis. In policy jargon, this is referred to as "capital to revenue transfer", and what this means in reality is that when central government fails to fund the NHS sufficiently - as it has done since 2010, it has resorted to the short-term strategy of raiding this budget to prop up other front-line services.

In Theresa May's announcement, we were promised by the Prime Minister that all of the money would be going to front line and care, and coming from fresh sources. In short, there was to be no more raiding of the NHS' capital budget.

However, this week it has been revealed, that yet again, the government has resorted to raiding the capital budget in order to fund front-line care.

To give you an idea of the consequences that we are now seeing play out across the NHS in England as a result of this short-term mismanagement of essential resources, the Independent reported last year, that hospital's were now having to combat crumbling buildings, leaks in operating theatres, routine electricity blackouts and defunct sewerage and drainage systems.

In light of this latest U-turn, Sir Robert Naylor, an independent government adviser and author of the Naylor Review slammed the decision when speaking to the Health Service Journal (HSJ):

“I was very critical of these transfers in my report and recommended that they stop, and the government agreed to stop them at the end of this year.

“So I personally find it very disappointing that the NHS is going to increase the amount of capital to revenue transfer in 2019-20. I think it’s in conflict with the government response to my report because they said they were going to stop doing it. This will just make matters worse.

“We simply have to stop doing this because we’ve been starving the NHS of capital funding for decades.”

In light of the revelations of further raids on capital expenditure experts at the Health Foundation think tank now estimate that the capital budget is the same, in real terms, as it was in 2010-11.

As a result, this means that capital investment per NHS worker is continuing to fall. Also speaking to the HSJ, Joshua Kraindler, economics analyst at the Health Foundation, said:

“These in-year transfers from the capital budget continue a cycle of short-termism, leaving trusts unable to afford the most modern technology while also using equipment beyond their expected useful lives.

“The funding environment is also leading some trusts to abandon long-term transformation projects due to the uncertainty of capital funding. At the same time, there is a rising maintenance backlog of £6bn, which is now larger than the annual capital budget and half of which is rated as high and significant risk.”

Consequently, this latest round of Conservative mismanagement of the NHS gives further proof to the argument the National Health Action Party has been making since our inception: the Tories cannot be trusted to run the NHS in the interests of ordinary citizens. The Conservatives are  seeking to run the NHS into the ground in order to legitimate  arguments promoting the privatisation of the health service as way in which to rectify the very "inefficiencies" that the government has deliberately manufactured.

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