An end to PFI announced in 2018 Budget

Confirmation of the extra £20.5 bn more in ‘real terms’ annual funding for the NHS by 2023-2024 announced this June, – including at least £2 bn annually for mental health, and an end to the use of the current PFI model, were among the notable elements impacting on health and social care in Chancellor Philip Hammond’s 2018 Budget Speech delivered on 29 October.

The Executive Summary to the 2018 Budget says: ‘The NHS is the government’s number one spending priority. In June the government set out an unprecedented multi-year funding plan, with associated cash budgets, for the NHS in England. At the time this equated to £20.5 bn more a year in real terms by 2030-2024, an average real growth rate in the NHS’s budget of 3.4% per year – taking the NHS budget from £114.6 billion in 2018-2019 to £147.8 bn in 2023-2024, with a total UK-wide scorecard cost of £83.6 bn.

The NHS agreed to come forward with a new long-term plan this year, to be agreed with the government. The cash settlement that the government promised in June 2018 is fully funded at this Budget. The NHS will deliver its plan by the end of the year, and the government will confirm the settlement consistent with that plan, and the £20.5 billion re-terms increase by 2023-2024, by Spending Review 2019.”

The Budget documents say the settlement will ‘enable the NHS to plan for its future and support it to deliver world-class care that people want and expect’, adding: “It is essential that every pound in the NHS is spent wisely.”

On mental health funding, the Budget’s Executive Summary says: “The government is committed to achieving parity of esteem between mental health and physical health services, ensuring that high quality mental health support is available for those that need it, in appropriate, safe settings. Funding for mental health services will grow as a share of the overall NHS budget over the next five years. Those services will take pressure off Accident and Emergency departments and other public services such as the police, probation, and social services. They will also ensure that people with mental illness can return to, and stay in, work, boosting employment and productivity.”

Under the plans for mental healthcare announced in the Budget, the NHS will invest ‘up to £250 m a year by 2023-2024 in new crises services’, including ‘24/7 support via NHS 111’, children and young people’s crisis teams in every part of the country, ‘comprehensive mental health support’ in every major A&E by 2023-2024, more mental health specialist ambulances, and more community services such as ‘crisis cafés’.

The Budget also provides an additional £240 m in 2018-2019 and 2019-2020 for adult social care, ‘to ensure people can leave hospital when they are ready, into a care setting that best meets their needs’, and a further £410 m in 2019-20 for adults’ and children’s social care.

The Government also announced in the 2018 Budget an end to its use of Private Finance 2, ‘the current model of Private Finance Initiative (PFI)’. However, it said existing PFI and PF2 contracts would not end ‘because of the announcement’; the Government would ‘honour its commitments’ on these.

HM Treasury said: “The high upfront cost of compensation means that it is rarely value for Monet to voluntarily terminate a PF1 or PF2.” Instead the Government is taking steps to maximise their value by piloting a Centre of Best Practice. (within the Department of Health and Social Care), ‘to provide support for contract managers at a number of NHS Trusts’. Since capital spending on public infrastructure is a devolved policy area, the announcement does not affect the Devolved Administrations.