Data released by Tussell demonstrates the public sector healthcare market is continuing to expand rapidly. Despite a small decrease following a sharp peak due to COVID-19, the total amount spent on direct healthcare procurement was 50% higher in 2021/22 than 2019/20. From this figure, 31% of contracts and frameworks was supplied by SMEs, totalling £11 billion during 2021/22, which is consistent with the government’s efforts to grow the proportion of public sector contracts awarded to small businesses and medium-sized businesses.
In the first two months of 2023, local authorities have received a sizeable increase of funding for health and social care.
Although total NHS funding has declined since the height of the pandemic during the 2020–2021 and 2021–2022 financial years, it is 14% higher than the previous comparable year in 2019/20, a trajectory that is expected to continue through to 2025 and the next general election.
It is local authorities, however, Executive Compass, leading UK providers in bid management services are expected to provide the most tendering opportunities due to devolved funding. Based on recent initiatives by the NHS and Department of Health and Social Care and the central government’s Levelling Up Programme, health and social care providers will be advised to look towards local authorities and integrated care boards (ICBs) for opportunities to provide services.
Downstream funding from the NHS
In January, the NHS released a total of £250 million to purchase extra beds in care homes as part of efforts to free up capacity in hospitals. From this funding, Health and Social Care Secretary Steve Barclay announced that £200 million would be allocated to ‘buy up beds in the community to safely discharge thousands of patients from the hospital and free up hospital capacity’, with the remaining £50 million assigned for ‘discharge lounges’ for a quick transition from hospital to alternative care provision.
This new initiative supplements the £500 million Adult Social Care Discharge Fund, enacted in June 2022. All funding was distributed to local authorities and ICBs, and due to the enormous strain on NHS hospitals and its direct employees, a large percentage of this funding is used to secure safe services via the tendering of contracts.
Department of Health and Social Care initiatives
Similarly to the NHS, The Department of Health and Social Care is increasing funding for projects across England. A February announcement saw an estimated £421 million earmarked to local authorities for drug and alcohol addiction treatment and recovery – the funding is allocated until 2025 and will result in a 40% increase from the 2021 budget.
Another ‘Family Hub’ policy will see 14 local authorities receive £300 million in funding for the provision of support for various issues, including infant feeding, mental health, relationship-building and children with special education needs or disabilities. The Department has indicated a further 12 local authorities will receive similar funding by March 2024 via the Family Hubs Transformation Fund.
Current and future social care projects are expected to be issued after consultation with the government’s ‘Levelling Up’ programme.
Levelling Up
Released in 2022, the current government’s Levelling Up White Paper emphasised the importance of local authorities in delivering geographically specific services, such as health and social care. The Local Government Association welcomed the findings as ‘a good first step’, particularly in its efforts to address geographic and ethnic health disparities across the country.
A year on from its release, the Levelling Up programme is beginning to roll out a suite of health and social care programmes to target the most deprived councils and local authorities of the UK. For example, a £35 million package to improve health conditions for residents of Blyth was announced in January.
The Levelling Up Commission is expected to issue further localised health policies throughout 2023, with approaches for proposals working ‘with and by local authorities, regional government and service providers.
How will increased health and social care spending from local authorities affect public procurement opportunities and tendering?
For providers, the healthcare business market is dynamic and diverse, and opportunities for the next few years will continue to grow, particularly those where local authorities are fulfilling the role of buyer. The Health and Care Act 2022 reiterated that ‘competitive tendering should continue to be a tool local authorities can use where it can add value’ while concurrently aiming to design new pathways between ICBs and providers.
Furthermore, the upcoming Procurement Bill may alter arrangements for procurement in health and social care, such as adjusting the ‘Light Touch Regime’ – the subject was discussed during the Cabinet Office’s most recent response to the consultation in December 2021.
A variety of circumstances and factors will impact total spending by councils and local authorities, including total population, the median age of the population and long-term health issues stemming from COVID-19. A report from Age UK estimated that 1.5 million people 65 or older were living with an unmet or under-met care need. Furthermore, demographic pressure will only increase over the next decade, as an estimated one in seven UK residents will be 75 or older by 2040.
In meeting these challenges, it will be necessary to develop localised and targeted approaches to communities, requiring local authorities and ICBs to work closer than ever with providers to preserve the health and well-being of British residents.