Government Response to the House of Commons Health Select Committee Report Into Public Expenditure on Health and Care Services (Eleventh Report of Session 2012–13)

Government Response to the House of Commons Health Select Committee Report into Public Expenditure on Health and Care Services (Eleventh Report of Session 2012–13)

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29419_2900928 Cm 8624.indd 1 07/06/2013 17:19 DeliveringGovernment high Responsequality, effective, to the compassionateHouse of Commons care: Developing Health Selectthe right Committee people with Report the right into Public Expenditureskills and the on rightHealth values and Care Services (Eleventh Report A mandate fromof Session the Government 2012–13) to Health Education England: April 2013 to March 2015

Presented to Parliament by the Secretary of State for Health by Command of Her Majesty

JuneApril 2013

Cm 8624 £00.00£8.75

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29419_2900928 Cm 8624.indd 4 07/06/2013 17:19 Contents

1. Introduction 3

2. Government response to the Committee’s conclusions and recommendations 4

Health funding 4

Quality, innovation, productivity and prevention 5

Health spending rules 8

Re-imagining care 9

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29419_2900928 Cm 8624.indd 2 07/06/2013 17:19 Introduction 3

1 Introduction

1. On 19 March 2013, the House of Commons Health Select Committee published Public Expenditure on Health and Care Services: Eleventh Report of Session 2012–13 (HC 651). The report followed an inquiry by the Committee, which sought evidence from the Secretary of State for Health along with other witnesses, including the NHS Confederation, the NHS Foundation Trust Network and local government representatives. 2. The Government has carefully considered the Committee’s report and the issues that it raises, and this paper sets out the Government’s response. 3. The Government agrees with most of the Committee’s overall conclusions, in particular about the scale of the financial challenge facing the health and care system. However, as a result of the reforms we have introduced, our commitment to increase health funding in real terms, and the steps we are taking to promote integration, we believe the system is well placed to achieve the efficiencies and deliver the transformation required to sustain and improve services into the future.

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2 Government response to the Committee’s conclusions and recommendations

Health funding 6. As the Committee recommends, NHS England is continuing to promote the Quality, In our view it would be unwise for the NHS Innovation, Productivity and Prevention to rely on any significant net increase in (QIPP) programme in order to maintain or annual funding in 2015–16 and beyond. improve the quality of healthcare services Given trends in cost and demand in a constrained funding environment. The pressures, the only way to sustain or Government also recognises that over the improve present service levels in the NHS long term, the NHS cannot rely on pay will be to continue the disciplines of the restraint and reductions in the unit cost of Nicholson Challenge after 2015, focusing care to deliver QIPP-scale efficiencies. Rather on a transformation of care through we need to transform the way in which health genuine and sustained service integration. and social care services are delivered, using (HC 651, paragraph 16) available resources more effectively and focusing on integrated care and prevention to Our working assumption is that annual improve patient outcomes and experience. spending on health services in real terms will show little if any variation above or 7. The Government’s reforms will enable below the 2010–11 baseline. (HC 651, commissioners to make changes that paragraph 39) will deliver real improvements in quality through commissioning that is driven by 4. The Government is committed to clinical insight, patient choice and a focus real terms spending increases in health on improving outcomes. This will promote spending. The 2013 Budget confirmed greater integration of services at the local the Government’s plan for the economy, level, including a more coordinated approach first set out in the June 2010 Budget: one to assessment, care planning and care based on fiscal responsibility and a credible management. deficit reduction strategy. The Budget also reaffirmed our commitment to protect health 8. Together with increased patient choice spending up to and including 2015–16. and a more rigorous and transparent system for regulating providers, these reforms 5. In light of the projections for the public will provide much stronger incentives and sector finances beyond 2015–16 and the opportunities to deliver more integrated, demographic challenges presented by an personalised and preventive care. ageing population, the Government agrees with the Committee that prudent planning is required for the medium-term.

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Quality, innovation, productivity therefore, to embrace every aspect of the QIPP Programme including – in particular and prevention – the major existing providers. (HC 651, paragraph 82) The evidence presented to the Committee demonstrates that the measures currently At the current rate of progress, we doubt being used to respond to the Nicholson that the predicted savings through Challenge too often represent short- transforming and integrating NHS term fixes rather than the long-term services will be fully realised by the end transformations which the service needs. of the Nicholson Challenge period. Unless (HC 651, paragraph 19) significant steps are taken to plan now for service redesign and integration, While nationally driven initiatives have a significant opportunity to improve certainly produced some short term cost the effectiveness and quality of NHS savings and may have produced some healthcare will have been missed. (HC sustainable efficiency gains, the response 651, paragraph 83) to the Nicholson Challenge necessarily involves large scale transformational 9. The Government agrees that it is change. The Committee believes that the vital for organisations to work together case for this transformational change collaboratively to deliver and communicate needs to be better made and better the case for transformational change: both understood. (HC 651, paragraph 54) to benefit patients and to improve efficiency. While we are protecting health funding in real The primary response of the NHS to terms, this does not mean that all services the Nicholson Challenge should be to should remain unchanged. The NHS will need prioritise fundamental service redesign to adapt and evolve to meet the challenges which will lead to better quality care for of future demographic trends and rising more NHS patients. Counting cuts to the demand expectations. NHS asset base as Nicholson Challenge savings risks distorting the programme’s 10. The Department and NHS England priorities. (HC 651, paragraph 70) have a key role to play in setting out and driving the case for transformational change. Our principal concern is, however, the For example, the Secretary of State has implication that there is a distinction challenged the NHS to go ‘paperless’ by to be drawn between “provider-driven 2018, highlighting the potential benefits for change” and “transformational change”. patients and for taxpayers. The Mandate1 A successful response to the Nicholson to NHS England set objectives for it to lead Challenge would involve sustained, year the health and care system in driving better on year efficiency gain in the health integration of services; and we will hold NHS and care system at twice the long term England to account for its performance. average rate which prevails in the rest of the UK economy. The Committee 11. Clinical commissioning groups (CCGs) believes that it is simply inconceivable and their local partners need to ensure that this performance can be delivered – together with the quality improvement that 1. Department of Health (2012) The Mandate: is also required – if planning proceeds A mandate from the Government to the NHS Commissioning Board: April 2013 to March 2015 within traditional silos. The commitment www.gov.uk/government/publications/the-nhs to “transformational change” needs, mandate

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that where changes to local services are be regarded as a sustainable form of proposed, these have the clear support efficiency gain. Sustainable efficiency and involvement of local stakeholders and gain involves securing improved quality clinicians. NHS England has committed in its or value for a given expenditure – it is not business plan to developing and overseeing delivered by simply suppressing staff a framework for local service change, setting salaries alone. (HC 651, paragraph 24) out the roles and responsibilities of different The NHS will not be able to rely on the organisations and developing a range of tools present rate of paybill savings once the and guidance to support CCGs delivering present restraints on public sector pay transformational change. are relaxed in April 2013. Furthermore, 12. However, service transformation although pay restraint is undoubtedly key cannot be imposed from the top. Clinical in the short term, it is neither prudent nor commissioners and their partners at local just to plan for sustainable efficiency on level are best placed to understand the needs the basis that NHS pay continues to fall of their communities and the opportunities relative to pay elsewhere in the economy. for improvement. Engagement on specific Short term pay settlements will always local service changes needs to be locally led reflect prevailing circumstances, but in the and as part of the authorisation process for longer term NHS employees will share the CCGs, NHS England has sought assurances same aspirations as employees elsewhere that locally CCGs are taking the necessary in the economy to participate in economic steps on service transformation. success. (HC 651, paragraph 68) 13. The Government has always been clear 15. Pay restraint is an important part of that efficiencies in the early years of the QIPP the Government’s strategy to meeting the period would focus more on central actions current economic and fiscal climate, while (e.g. pay, cutting bureaucracy) and improving maintaining services and jobs. We have set productivity; and that savings from more clear expectations on pay restraint across the transformational changes would take longer. public services, with public sector pay awards 14. We also recognise that the efficiency averaging up to 1% in 2013–14 and 2014–15. challenge requires the delivery of recurrent In addition, the 2013 Budget confirmed that efficiency savings of up to £20 billion by public sector pay awards in 2015–16 will be 2014–15. This means that any one-off savings limited to an average of up to 1% and that will need to be replaced with other sources significant further savings through reforms of savings in subsequent years. The National to progression pay will also be sought in the Audit Office has confirmed that the vast forthcoming spending round. We recognise, majority (over 90%) of efficiency savings of course, that in the longer term, pay trends delivered to date are recurrent.2 will be dependent on wider economic factors. Although it is certainly true that public Still less is efficiency gain secured for sector pay restraint has the short term the NHS by reducing the tariff paid by an effect of reducing the cost of service NHS Commissioner to an NHS Provider. provision to the NHS budget, the Tariff payments are internal transfers; Committee does not accept that can they only result in efficiency gain for the NHS if the NHS Provider changes the 2. National Audit Office (2012) Progress in making way care is delivered. The Committee is NHS efficiency savings (HC 686) www.nao.org.uk/ concerned that it has received insufficient wp-content/uploads/2012/12/1213686.pdf

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evidence of such service change by NHS of patients with a fragility hip fracture, the Providers; it is also concerned that both proportion of patients receiving surgery within NHS Management and ministers appear 48 hours of admission increased from 60% to to be convinced that changing an internal 70%. The academic evaluation3 estimates this transfer payment constitutes a form of increase was four percentage points higher efficiency gain. (HC 651, paragraph 25) for providers participating in the best practice We have highlighted in previous reports tariff compared with those that did not. our concerns about the use of tariff 18. As NHS England and Monitor take reduction as an overall policy to drive joint responsibility for setting the tariff from efficiencies on the provider side. Tariff 2014–15, they have committed to developing reduction does not encourage efficient a longer-term strategy that uses pricing behaviour on the commissioner side, as effectively as possible to drive better and we have received little evidence outcomes and efficiency. to suggest that the tariff is being used At a time when steadily rising demand intelligently to drive service transformation for health and care services needs to be and greater integration. We fear that met within very modest real terms funding further turns of the tariff ratchet will increases for the NHS and even tighter lead to further salami-slicing of NHS resource constraints on social care, the Provider services in ways which prioritise Committee remains convinced that the expenditure reductions over imaginative breadth and quality of services will only service redesign. (HC 651, paragraph 78) be maintained and improved through the 16. The Government recognises that the full integration of commissioning activity tariff is a pricing mechanism: while the setting across health and social care. (HC 651, of tariff prices provides important incentives paragraph 30) for efficiency, it does not, in itself, represent 19. The Government agrees with the an efficiency saving. As the Committee points Committee that health and social care out, efficiency savings are only made when services must be seen as one system, and providers take action to ensure they can live be planned together accordingly. within the income they receive through the tariff. In aggregate, the provider sector is in 20. Person-centred health and care financial surplus, which suggests that savings services need an integrated approach to are being made, though some individual commissioning and service provision, with providers do face specific challenges. the precise model depending on local circumstances. Integrated care is about local 17. The tariff is just one of a number of authorities and the NHS working together, levers to help promote service transformation with support from national government, to and integration, and the tariff alone cannot find local solutions to their priorities in order deliver transformational changes in how to transform public services within available care is provided locally. Nevertheless, real resources. Central government will support progress has been made: for example, the local authorities and the NHS to find these introduction of an increasing number of ‘best practice tariffs’ where payment reflects the 3. University of Nottingham and University of cost of best practice models of care rather Manchester (2012) A Qualitative and Quantitative than simply average cost. When a new best Evaluation of the Introduction of Best Practice practice tariff was introduced for the care Tariffs www.nottingham.ac.uk/business/news/ documents/bpt-dh-report-21nov2012.pdf

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solutions, but local leaders must work May 2013, the Department along with our together on how best to achieve integration national partners in healthcare and support for their area. published, Integrated Care and Support: Our 4 21. This approach will ensure high quality, Shared Commitment, which sets out 10 responsive and efficient services that meet commitments that the national partners have the needs of local populations within the made to enable and encourage change at funding available. scale and pace, as well as expectations on local areas in return. The national partners 22. Through the reforms in the Health have also invited the most ambitious areas and Social Care Act 2012, the Government to apply to become ‘pioneers’ and act as has put in place a series of powers to drive exemplars to address local barriers and the process of fundamental change in support the rapid dissemination, promotion person-centred service provision. The Act and uptake of lessons across the country. strengthens integration duties both locally and nationally and places commissioners – including NHS England, CCGs and local Health spending rules authorities – at the centre of decision-making. It will be for local health and wellbeing boards We recommend that the Department of to coordinate these efforts to respond to the Health, the NHS Commissioning Board rising demand for health and care services. and the Treasury review the operation of accounting policies and rules which apply 23. Health and wellbeing board members to revenue and capital expenditure on will include all local health and care health services. (HC 651, paragraph 51) commissioners and budget holders. Jointly, 26. The Government’s budgeting rules (set they will be responsible for identifying and out in HM Treasury’s consolidated budgeting assessing needs and co-producing a Joint guidance)5 are kept under regular review. Health and Wellbeing Strategy that sets out However, the Government does not see how local partners’ commissioning activities the need to change the current budgeting across health, social care and the wider rules at this time. These rules have two main determinants of health will meet the needs of objectives: their local community within local resource constraints. • To support the achievement of macro economic stability by ensuring that public 24. This arrangement will allow local expenditure is controlled in support of the partners and budget holders to hold Government’s fiscal framework. each other to account, and will enable local communities, HealthWatch and • To provide good incentives for elected representatives to ensure local departments to manage spending well to commissioners deliver the best outcomes provide high-quality public services that and use of resources. This includes offer value for money to the taxpayer. using pooled funding and integrated commissioning.

25. In November 2012, the Minister for Care 4. Department of Health (2013) Integrated Care and and Support, Norman Lamb, committed to Support: Our Shared Commitment www.gov.uk/ encouraging local experimentation, “. . . at government/publications/integrated-care scale and pace”. In support of this, on 14 5. See www.hm-treasury.gov.uk/psr_bc_ consolidated_budgeting.htm

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27. This system applies to all bodies capital, subject to the regulatory/legislative classified by the Office for National Statistics regime of their sector. (ONS) as ‘central government bodies’. For the Department of Health, this includes: NHS foundation trusts CCGs; NHS providers (NHS trusts and NHS 30. NHS foundation trusts are required to foundation trusts); Public Health England (an comply with licence conditions set by Monitor. executive agency); special health authorities; Through the licence, Monitor will assess NHS and, executive non-departmental public foundation trusts’ financial viability. Monitor’s bodies such as NHS England. compliance framework sets out the approach 6 28. Allocations to the Department’s bodies that it takes to assess this compliance. have to be considered within the constraints NHS trusts of the budgeting rules and the funding available for that year. The Department has 31. Each NHS trust’s board is responsible committed to providing surpluses generated for planning and controlling the activities, by the commissioning sector back to them costs and income of the trust to ensure that in the following year. It would not be prudent it remains financially viable at all times. The for these bodies to use the entire underspend board is accountable for financial control in the following year, because carrying a and for ensuring that the NHS trust meets its surplus provides the flexibility to respond statutory duty to breakeven. Paragraph 2(1) of to unexpected costs. Therefore, plans are Schedule 5 to the National Health Service Act agreed that involve a steady use of the 2006 states that: underspend over a number of years, funded “Each NHS trust must ensure that its revenue from the wider Department of Health budget. is not less than sufficient, taking one financial The Committee is particularly concerned year with another, to meet outgoings properly that the rules around budget exchange chargeable to revenue account” for NHS Providers are unnecessarily 32. NHS providers are classified by inflexible. Provided NHS Commissioners the ONS as ‘central government bodies,’ are subject to effective expenditure meaning that their underspends, overspends control, and provided also that Monitor and capital expenditure score to the is able to exercise effective control over Department’s budget in the year that they recurrent deficits in NHS Providers, the occur. The Department’s financial plans Committee believes that the controls on therefore have to include a forecast of these the use of reserves by NHS Providers net underspends, overspends and capital should be abolished to encourage expenditure. Providers to invest in necessary service change. (HC 651, paragraph 52) Re-imagining care 29. Although the Department is bound by the budget exchange rules that govern the The heart of the Committee’s approach is ability to carry forward underspends from that the care system should treat people one year to the next, NHS providers are not not conditions. Services should adapt to subject to these rules. They are allowed to people, not the other way round. (HC 651, keep the cash that they have accumulated paragraph 86) and spend it in future years on revenue or

6. See www.monitor-nhsft.gov.uk

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33. The Government’s White Paper on Care Combined with the other provisions in the and Support set out a vision for a modern Bill, this will allow people to understand the system which promotes people’s wellbeing by options available to them and exercise control enabling them to prevent and postpone the over how their care and support is provided. need for care and support, and puts them in 38. Personal budgets are also being control of their lives to pursue opportunities, introduced in health. This follows the including education and employment, to successful pilot programme, which realise their potential. demonstrated that they are more effective for 34. The central principle of the newly people who are higher users of NHS services: published Care Bill is that people are at the such as people receiving NHS continuing heart of how services are shaped. This is healthcare, and those with long-term and reflected in the first clause of the Bill, which substantial physical and mental health needs. is about promoting individual wellbeing. They can improve quality of life, be cost This wellbeing principle underpins the entire effective and reduce the need for secondary care and support system, ensuring that the care. person’s wellbeing should be at the heart 39. It is the Government’s longer-term aim of every decision made in the social care to introduce a right to have a personal health system. budget for all those who may benefit, with 35. The Government is aware that the those receiving NHS continuing healthcare care and support system is complex and being the first to have a right to ask for difficult to navigate. The Bill states that every a personal health budget by April 2014. local authority must have an information and The Mandate to NHS England sets out an advice service so that people are able to ambitious objective that, “. . . patients who understand how the care and support system could benefit will have the option to hold their works, what services are available locally, and own personal health budget, as a way to how to access those services. have even more control over their care.” 36. There is a duty in the Bill for local 40. Integrated care and support means authorities to shape local care markets by person-centred, coordinated and continuous promoting the diversity and quality of local care and support, tailored to the needs and services around what people want, so that preferences of the individual, their carer and there is a range of high-quality providers family. It means moving away from episodic in all areas allowing people to make the care to taking a whole person view of health, best choice to satisfy their own needs and care and support needs. preferences. 41. Care that is ‘integrated’ offers the 37. The Bill captures in law for the first time potential for genuine benefits for patients the process of care and support planning. and service users and for health, care and People will be central to determining what support services to make measurable their own care and support plan looks like. improvements in patient and service user Care and support plans will include personal experience, outcomes and system efficiency. budgets, which the Bill places on a legislative The Government wants integrated care footing for the first time. Where a local and support to become the norm for local authority is paying to meet a person’s needs, working. This will support the delivery of the person will be able to request the cost of truly personalised services focussed around that care and support as a direct payment. individuals and not organisations.

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42. There is a new duty in the Care Bill mind over the cost of old age. This is the first to promote integration of care and support time ever that a cap has been introduced to with health services. This is a counterpart protect people from spiralling costs. duty to the duties on NHS organisations 45. The Government’s new measures will created in the Health and Social Care Act give everyone the assurance that they will get 2012. It means that priority will be placed on the care they need, and that they and their integrating services to ensure they fit around home will be protected from huge costs if what outcomes people want, rather than they develop very complex care needs – such forcing people to fit around how the system is as dementia or a number of conditions that designed. mean they need many hours of care a day. 43. To be able to deliver integrated care 46. This is crucial in the context of an and support we must have a shared ageing society. With the number of over 85s understanding of what integration means. doubling by 2030 and cases of dementia As part of the work on Integrated Care and expected to rise at a similar rate, it is vital that Support: Our Shared Commitment, NHS people are offered a clearer, fairer and more England commissioned National Voices, a affordable way to plan for and manage their national coalition of health and care charities, care costs. to develop a person-centred narrative on integration that the whole system could 47. At the Budget in March, the Chancellor adopt. The national partners have adopted announced that the Government would this definition of what good integrated care be bringing forward the start of the cap on and support looks and feels like and we care costs to April 2016, and will reduce the expect all localities, including pioneers, to cap level to £72,000. The lower cap level of adopt it too. £72,000 in 2016 ensures that it is equivalent to the previous announcement of a £75,000 The Government has accepted the key cap in 2017 prices. This means more people principles set out in the Dilnot Report will benefit sooner from the reassurance and with the key exception that it proposes protection our reforms would bring. that the cap on individual contributions should be set at £75,000 in 2017–18 48. Subject to the passage of legislation, prices (equivalent to £61,000 at 2010–11 the capped cost system will provide people prices). The Committee plans to review with a new legal right to financial protection the implications of the Government’s from very high care costs from the State. proposal to introduce the cap at a higher People will be more easily able to plan and level than recommended by Dilnot, but it prepare for their future, including the care and welcomes the Government’s endorsement support they might need. of the principles set out by Dilnot, and its We recommend that the new health and commitment to introduce the necessary wellbeing boards should be developed as primary legislation. (HC 651, paragraph the forum in which all interested parties 88) should evolve the future shape of health 44. The Government is pleased that the and care services in their area. (HC 651, Committee has welcomed the commitment paragraph 95) to the principles set out by the Dilnot Against the background of a common Commission. These historic reforms will desire to avoid further management give everyone more certainty and peace of upheaval, and recognising the dangers

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of an over-prescriptive approach, the 51. We agree with the Committee that we Committee repeats its recommendation should not be over-prescriptive as there are that health and wellbeing boards and no ‘one size fits all’ blueprints for integrated clinical commissioning groups should be care and support models. Each locality placed under a duty to demonstrate how needs to develop the right solution for their they intend to deliver a commissioning local population and circumstances. We will process which provides integrated health, explore ways to achieve the recommendation social care and social housing services in without resorting to primary legislation: their area. (HC 651, paragraph 100) for example, we will consider further with The Committee believes that the best our partners how we can support the way to provide services which treat recommendation for health and wellbeing people rather than conditions and boards to demonstrate how they intend services which adapt to people rather to deliver a commissioning process which than causing people to adapt to services provides integrated health, social care and is to bring together funding, planning social housing services in their area. and commissioning of services around 52. In addition to this, as part of our newly the forum of the Health and Wellbeing announced plan for vulnerable older people, Board. All health and social care services which will look at aspects of the way older in a given area should be included in this people most in need of support from the pooled process, including those which NHS and social care system are looked after, are developed to fund and implement the we will be looking into removing barriers to Dilnot proposals. (HC 651, paragraph 102) integration as well as improving primary care 49. The Government agrees that health and the care provided by hospitals, including and wellbeing boards should be the forum the role of emergency care. for all interested parties to shape health 53. We need to ensure care for patients and care services in their area. Our vision is joined up across general practice and is for health and wellbeing boards to be the primary, secondary and social care starting local system leader for health and wellbeing, with diagnosis. Work has already started to bringing together local authorities, the empower local health and care communities NHS, public health and local communities to improve integrated care and support for to collaboratively develop a shared their populations, and to tackle the barriers to understanding of the health and wellbeing achieving this. We need to build on the good needs of the community, and a shared practice to make integration the standard strategy to address those needs and improve approach. During summer 2013, we will be outcomes. identifying integrated care ‘pioneers’ and their 50. The Government believes that CCGs work will inform us about a range of issues, and health and wellbeing boards should be including commissioning integrated care. required to deliver and promote integrated What matters most of all is the impact on care and support, not simply to plan it. This patients and service users and their carers. is why these bodies are under clear duties By the end of 2013 we will have developed to ensure and promote the integration of new ways of measuring people’s experience services and will be measured against their of integrated care and support, which will be outcomes in delivering this, not their process reflected in the health, social care and public in planning it. health outcomes frameworks.

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54. The Health and Social Care Act 2012 boards need direct responsibility for funding strengthens the duties to promote and enable or commissioning services. Health and integration between health, care and support, wellbeing boards have been established and ‘health related’ services such as housing to take on the function of joining up the on NHS England, CCGs, and health and commissioning of local NHS services, social wellbeing boards. If enacted, the Care Bill care and health improvement: setting a will place similar duties to cooperation and strategic approach and promoting integration integration on local authorities. This will be across health and adult social care, children’s reinforced through the NHS Constitution, services including safeguarding, and the the Mandate from the Secretary of State for wider local authority agenda. Health to NHS England and through aligning 57. The arrangements that have been put the three outcomes frameworks. Further, we in place give local authorities influence over are developing a measurement of patient and NHS commissioning, and corresponding service user experiences of integrated care to influence for NHS commissioners in relation place in the three frameworks. Together these to public health and social care. The aim levers will work to ensure localities deliver is to ensure coherent and coordinated integrated and joined up services. local commissioning strategies across all 55. Health and wellbeing boards are health and care services. We have also already placed under a duty to develop a joint simplified and extended the use of powers understanding of current and future health that enable joint working between the NHS and social care needs of the local population and local authorities, making it easier for through Joint Strategic Needs Assessments commissioners and providers to adopt (JSNAs) and to use the JSNAs to develop partnership arrangements. Health and Joint Health and Wellbeing Strategies wellbeing boards will be able to consider the (JHWSs) to address identified needs. Health use of NHS Act 2006 flexibilities, such as and social care commissioners, including pooled budgets and lead commissioning, local authorities, NHS England and CCGs to support their JHWSs. Furthermore, local must have regard to JSNAs and JHWSs. authorities will be able to commission on This means that in making any decisions behalf of CCGs and vice versa. to which JSNAs or JHWSs are relevant, for The Committee recommends that the example a commissioning decision, they Government should introduce a ring fence must take account of the relevant JSNAs to protect the current level of real-terms and JHWSs, and must be able to justify any funding available to social care. This parts of their plans that are not consistent. approach would ensure that resources In effect, JSNAs and JHWSs will lay the were no longer treated as ‘belonging’ foundation for both local authorities’ and NHS to a particular part of the system, but commissioning plans. Combined with the to the local health and care system as a integration duties on each of these bodies whole. With agreement on local priorities, this will ensure that integration is at the heart and with binding commitments on the of the commissioning planning process. amount of money available to fund them, 56. Although the Government agrees a flexible, responsive health and care that health and social care services need economy could be established which to be integrated around the needs of the would use the total budget provided for people they serve, we do not support the health and care more efficiently than is recommendation that health and wellbeing the case at present with separate funding

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streams and different objectives. (HC 651, social care transfer monies (almost £1 billion paragraph 106) in 2014). 58. At the 2010 Spending Review, local 64. The 2010 Spending Review provided a government gave a strong message that challenging settlement to local authorities. In reducing ring-fencing would allow them this context, the Government prioritised adult to make better prioritisation decisions and social care by providing substantial additional redesign services at a local level, thus funding. The NHS provides a significant delivering better services more efficiently. This proportion of this funding to local authorities, is why the Government has given them this for use on social care services with a health flexibility over this Spending Review period. benefit. This arrangement promotes closer We have placed certain conditions on the integration of health and social care by money transferring from the NHS to local providing an opportunity for the NHS and authorities during this period to ensure that it local government to work together across is used for social care that also has a health organisational boundaries and deliver on benefit. shared objectives. 59. Funding arrangements for 2015–16 will 65. As set out above, the Department of be announced in June 2013 as part of the Health is working across government to current spending round, and arrangements support local initiatives and identify what for future years will be set at future Spending needs to happen to drive this integrated care Reviews. at a national level. This is likely to include 60. However, the Government does agree flexible and innovative funding arrangements, that integrated, flexible and responsive improving information sharing, harnessing services that are built around the needs technology, removing barriers where they of patients and service users, carers and exist and strengthening the evidence base families, are an essential component of high- for integrated care by learning from innovative quality health and care. models such as the Community Budget pilot sites, which are pooling public funding to 61. The Health and Social Care Act 2012 make integrated services a reality for their introduces important duties in relation to communities. integration, both nationally and locally. Local health and wellbeing boards will bring 66. All of this offers real potential to together commissioners and budget holders bring about a flexible, responsive health to deliver the best outcomes and the best and care economy that will use the total use of resources. budget provided across the NHS and local government more efficiently than is the case 62. Provisions in the Health and Social at present. Care Act 2012 ensure that partnership arrangements and pooling of funding can continue in the new system architecture (under section 75, 76 and 256 of the NHS Act 2006). 63. These flexibilities allow for funding to flow across local authorities and NHS bodies, guided by health and wellbeing boards: for example, for joint commissioning and the

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