Blog 5th August 2019

Blog 5th August 2019

In this week’s blog, I refer to: Boris Johnson, NHS England, Health Foundation, Nuffield Trust, King’s Fund, Guardian, Department for Education, schools, Brexit, Kent County Council, Scotland, council housing finance, seminar, training.

Boris Johnson announced an additional £1.8billion of funding for the National Health Service in England last Friday. This is intended to fund new equipment and the upgrading of twenty hospitals that had been announced previously. More details have been announced today. £1billion is to fund a backlog of hospital maintenance work, and £850million is to be spread over five years to upgrade the twenty hospitals. The additional funds represent less than 1% of the total National Health Service budget in England. This is one of several government pledges to increase expenditure and reduce taxation that will inevitably be funded through increased borrowing.

Queen Elizabeth's Hospital at Gateshead, Tyne & Wear

A government spokesperson said that:

“The prime minister has been clear since day one that the National Health Service is a top priority. This money will be felt by frontline services, by the doctors and nurses whose hard work is invaluable, and by the patients they care for.”

Simon Stevens, the head of the National Health Service England said that the money is a:

“Significant start (to) much needed capital investment… The concrete steps being set out this week will mean investment flows directly to frontline services, providing new clinics and wards."

The Health Foundation states that National Health Service facilities in England are in major disrepair and that £6billion is needed to fund backlogs. They said that:

"Years of under-investment in the National Health Service's infrastructure means this extra money risks being little more than a drop in the ocean".

Researchers at the Nuffield Trust think-tank have suggested that the pledge to upgrade twenty hospitals would cost at least £3.2billion, based on an assessment of hospitals two years ago. Sally Gainsbury, a senior policy analyst at the Trust tweeted that:

“Based on the conservative £160million cost estimate per trust, the total cost for upgrading all National Health Service services would be around £33billion… That wouldn’t all need to happen at once – it takes time to build a new hospital wing after all. There have been calls to double the National Health Service budget for National Health Service investment – including from the National Health Service’s own regulator National Health Service Improvement. That would take investment to around £14billion next year.”

Sally Warren, Director of health think tank the King's Fund, said that:

"At one level yes, it is new money - if the Treasury today were not providing this money, National Health Service trusts would not be able to spend this £1.8billion… But another view is that actually - particularly the £1bn that's been announced today - is really reversing cuts that trusts were asked to make this year."

Some commentators have suggested that these pledges are likely to be part of the government’s preparations for a general election, but I am not sure. Government statistics show that economic growth in the United Kingdom is now very slow – if it exists at all. If Britain leaves the European Union in October, especially if there is no deal, most commentators expect there to be a significant economic ‘shock’. I think that these measures are designed to sustain the economy at a time when demand from consumer spending, private investment and exports are all weak. I certainly don’t think they are enough to tackle the scale of the financial problems that are currently faced by the National Health Service, but they may provide some additional turnover for the construction industry that I am sure they will find welcome.

An interesting piece appeared in the ‘Guardian’ last week entitled: ‘Secret report reveals government fear of schools chaos after no-deal Brexit’. It describes a five-page document entitled ‘Department for Education No Deal Programme Schools’ – marked ‘Official Sensitive’ and with the instruction ‘Do Not Circulate’.

The report states that schools may have to close, exams could be disrupted and fresh food for pupils’ meals could run short… with prices increasing by up to 20%. It also raises the possibility of teacher absences caused by travel disruption.

Queen Elizabeth's Grammar School, Penrith, Cumbria

On food shortages, the report states that:

“In light of any food shortages or price increases we will communicate how schools can interpret the food menu standards flexibly. The Department for Education may make exceptional payments – or submit a prepared bid to HM Treasury for additional funding. Worst case scenario estimate of the increased costs – £40 to £85million a year for schools in relation to free school meal provision based on price increases of 10-20%... Warehousing and stockpiling capacity will be more limited in the pre-Xmas period. The department has limited levers to address these risks. We are heavily dependent on the actions of major suppliers and other government departments to ensure continued provision.”

The report points to risk of travel disruption, especially in Kent, saying that:

“Risk of travel disruption could result in school and early years settings closures, pupil and staff absence and exam disruption.”

This strikes a chord with what I am hearing from local authorities in Kent that are preparing for ‘Brexit’ that are enabling staff to work from home in the event of travel disruption.

Ian Watts, area education officer at Kent county council, told the Guardian that:

“We have a duty to families to ensure schools do all they can to ensure provision, even in times of emergency.”

Last week the government announced that it had allocated an additional £2.1billion to Brexit preparations, bringing the total that they plan to spend to £6.3billion. However, local authorities argue that the additional funding that is being made available to them will not be enough to deal with the pressures they are facing and will face because of ‘Brexit’.

The ‘Guardian’ report can be viewed on their website at: https://www.theguardian.com/politics/2019/aug/03/secret-education-report-no-deal-brexit-school-chaos?utm_term=RWRpdG9yaWFsX0d1YXJkaWFuVG9kYXlVS19XZWVrZW5kLTE5MDgwNA%3D%3D&utm_source=esp&utm_medium=Email&utm_campaign=GuardianTodayUK&CMP=GTUK_email

I will be in Scotland on 17th September to present our seminar on ‘All You Want to Know about Scottish Local Authority Housing Finance’. This seminar is a useful introduction and overview of this important subject. For further information about this training or to make a booking, please click here.