Contribution
I agree entirely with the hon. Lady. She has obviously been reading my speech— I will cover the announcement later in my speech, at which point she will hear exactly what it says.
As I say, the NAO has confirmed that productivity levels have dropped by 23%. I welcome the Government’s commitment to a 10-year plan for the NHS. We have also repeatedly warned that, with an ageing and increasingly sick population, the NHS will struggle to cope with the ever-increasing multiple complex demands of our population.
I wish to split this speech into three sections: how productivity could be improved in the NHS; funding; and, as the hon. Member for Stafford alluded to, technical advancements and a shift into community care.
The Department of Health and Social Care’s day-to-day spending—RDEL—is set to increase by £10.9 billion—from £187.9 billion to the main estimate as produced today of £198.5 billion. The capital spending is, however, set to decrease by around £1 billion, from £12.5 billion to £11.5 billion—a decrease of 8%. That is worrying as it shows that more and more funds are being redirected from long-term investment—for example, in the new hospitals to which the previous Government had committed themselves. I welcome the new Treasury guidelines that have stopped the practice of the past few years of redirecting up to £1 billion from capital spending to day-to-day spending. That should help to make more money available.
The NHS estate, as we all know from our constituencies, is in desperate need of investment, and our capital investment programme is running behind schedule. The problems with reinforced autoclaved aerated concrete have only added to the necessity of upgrading our hospitals, and I hope the Minister will listen to this plea.
The latest NAO report on the DHSC annual report and accounts shows that local systems, such as integrated care boards and NHS providers, reported a year-end overspend of £1.4 billion. This has nearly doubled from £621 million in 2022-23. This was despite an extra £4.5 billion of additional funding during 2023-24, which was to support pay deals for non-medical staff, mitigate any impacts from industrial action and provide money to address the costs of new pay arrangements for doctors and dentists.
What I do not think is acceptable is the glacial pace of agreeing priorities and approving final budgets for the local systems. In November, our Committee was shocked to hear that, in the past two years, those local systems—ICBs and others—had not had their financial plans approved by the Department until June and May respectively. That is up to three months after the start of the financial year. How can our poor local systems plan efficiently when these final allocations and guidance are so late? If the Department’s own accounts were finalised much sooner, our local systems would be able to have the money allocated in a more timely way, making wastage and inefficient spending less likely.
I welcome the Secretary of State’s prognosis that the NHS is far too big and complicated. There should be a shift towards allowing NHS trusts more control of their own budgets, as clarified in the 2025-26 priorities and operational planning guidance published in January. Moving more funds directly to NHS trusts, ICBs and local systems will improve accountability and give them a level of flexibility about how their funds should be better spent, rather than just focusing on targets and directives. For example, if they were to run a surplus because they had run their operation so well, they could reinvest the money in desperately needed capital projects rather than returning it to Whitehall. That must also go hand in hand with a need to improve productivity. Between 1996 and 2019, the NHS averaged a measly 0.6% a year increase in productivity.
Since the pandemic, productivity has now fallen by 23%. In March 2024, the Conservative Government announced that the NHS would receive £3.4 billion of capital investment for digital improvements between 2025-26 and 2027-28, which begins to address the point that the hon. Member for Stafford mentioned. As part of that investment, NHS England committed to achieving ambitious average productivity improvements of 2% per year through to 2029-30. However, those digital improvements, presaged by that additional £3.4 billion, have not yet been fully actioned.