Public Expenditure - Health Committee Contents


The October 2010 Spending Review has imposed tough settlements on both health and social care, and sets a highly challenging context for the delivery of health and social care services over the next four years. In both cases efficiency gains will need to be made on an unprecedented scale if care levels are to be maintained and the quality of services improved.

The local government settlement will have an inevitable impact on the provision of social care. The Secretary of State told us that the Spending Review settlement, coupled with the two year pay freeze, will provide councils with the necessary resources to sustain current eligibility levels for social care. The evidence submitted to us, including the evidence submitted by the Government itself, does not allow us to agree. Councils will need to sustain further efficiency savings of up to 3.5% per annum to avoid reducing their levels of care, and this will not be easy.

In this context the Government is placing understandable emphasis on the 'extra' funding for social care, through the Personal Social Services grant and the £1bn through the NHS. However, the majority of our witnesses were concerned that the increases in the PSS grant will not be reflected in changes in actual spending on social care.

The health settlement represents a significant challenge to the NHS, requiring efficiency savings on an unprecedented scale. It is vital that these savings are made by efficiency gains rather than making cuts. Unfortunately, we do not believe that the Government is providing a clear enough narrative on its vision of how these savings are to be made.

In addition, these savings will need to be made in the uncertain landscape of the NHS reorganisation following the White Paper. The reorganisation will bring its own costs, both direct and indirect, and the Government will need to maintain close financial oversight in the transition period. It is unfortunate that the Government has not yet provided even a broad estimate of the likely costs of the reorganisation.

Improving the interaction between health and social care will be critical if the necessary cost savings on both sides are to be realised. The potential to make savings in this area has long been acknowledged, but has not yet been properly achieved. We doubt whether the current institutional or policy structures are fit for the purpose of achieving the goal of improved partnership between health and social care. It is not enough for the Government to exhort change in this area: there must be a formal policy infrastructure that recognises the importance of achieving a better overall interface between the two sectors.

The allocation of £1bn from the NHS revenue budget recognises the interaction between health and social care, but there is a risk that the sum will be focused on funding certain limited services, rather than being directed towards providing a better overall interface between the two sectors which will bring about longer-term improvements in efficiency, preventive care and reablement.

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Prepared 14 December 2010