Public health grant: What it is and why greater investment is needed – The Health Foundation

26 October 2022
Note: This analysis uses the GDP deflator published by the OBR in March 2022 as the baseline. As an additional scenario it provides a deflator for 2022/23 that has been adjusted to illustrate the potential effect of higher than expected inflation.
The public health grant is paid to local authorities from the Department for Health and Social Care (DHSC) budget. It is used to provide vital preventative services that help to support health. This includes smoking cessation, drug and alcohol services, children’s health services and sexual health services, as well as broader public health support across local authorities and the NHS. 
In 2022/23 the allocation for the public health grant was £3.4bn. Figure 1 shows the expected expenditure by element of public health provision. The largest areas of planned spend were on: 
services for children age 0–5 years – which is largely health visitors for infants and mothers (£0.9bn)
drug and alcohol services for adults (£0.7bn)
sexual health services (£0.6bn). 
While DHSC spend on NHS England has increased in real terms over the past decade, there has been a 24% real-terms per person cut in the value of the grant between the initial allocations for 2015/16 and 2022/23.  
The change in the real-terms value of the public health grant is shown in Figure 2. The latest available projection of a GDP deflator to assess real-terms changes in public spend was published by the OBR in March 2022. Inflation in recent months has been higher than expected at that time. We therefore include a scenario to illustrate the potential additional effect of higher than expected inflation through 2022/23.
Despite a commitment at the 2021 Spending Review to maintain the public health grant in real terms until 2024/25, higher than expected inflation means it is already set to fall in real terms in 2022/23. 
Using economic assumptions from March 2022 we estimate that restoring the public health grant to its historical real-terms per person value – and accounting for both cost pressures and demand levels – would require an additional £1.5bn a year in 2022/23 price terms by 2024/25 (the final year covered by the Spending Review). This estimate is likely to change with new economic assumptions and – because we assume the overall cost-of-service provision reflects wage costs and general price inflation – will be partly dependent on the relative difference between the GDP deflator and earnings growth.
Figure 3 shows how the reduction in grant allocations fed through into spend on different elements of public health provision. It shows the change in real-terms spend between 2015/16 and 2022/23.Some of the largest reductions in spend over the period were for:  
stop smoking services and tobacco control, which fell by 41% in real terms 
drug and alcohol services for adults (28%) 
sexual health services (23%). 
Public health grant allocations have been made just before the start of the financial year for the past 3 years. On top of the large real-terms reductions in the grant, the lack of certainty this creates can make it difficult for local authorities to effectively plan and implement services for the longer term.
Local authority public health interventions funded by the grant provide excellent value for money. Research shows that each additional year of good health achieved in the population by public health interventions costs £3,800, measured using Quality Adjusted Life Years (QALYs). This is three to four times lower than the cost resulting from NHS interventions of £13,500 (per additional year of good health). 
A review by the University of Cambridge, commissioned by the Health Foundation, has found a considerable evidence base demonstrating the effectiveness and cost effectiveness of public health and preventative interventions. Not all public health interventions are equally effective or cost effective, and their impact on health inequalities can differ. Public health teams need to determine the combinations of services to commission and deliver to best improve health and reduce inequalities in their local areas. 
Poor health is strongly associated with living in socioeconomic deprivation. There is a 19-year gap in the number of years a girl born in the most deprived 10% of areas can expect to live in good health, compared with a girl born in the least deprived 10% of local areas. These underlying health inequalities contributed to the COVID-19 mortality rate for those younger than 65 years being nearly four times higher in the most deprived areas than for those in the least deprived.  
However, cuts to the grant have been greater in more deprived areas. Figure 4 compares the real-terms per person cut in public health grant allocations between 2015/16 and 2022/23 to the deprivation score in each local authority. It shows that per person reductions in the public health grant tend to be largest in more deprived areas. In Blackpool, ranked as the most deprived upper tier local authority in England, the per person cut to the grant has been one of the largest – at £42 per person. 
Investment in prevention represents excellent value for money compared with health care spend. Yet recent announcements have continued the trend of disinvesting in the wider funding that helps to maintain and improve people’s health.
It is clear that opportunities to prevent the early deterioration of health are being missed, while the need for such interventions is increasing. Failure to invest in vital preventive services will mean health worsening further, widening health inequalities, and the costs of dealing with this poor health will be felt across society and the economy. For instance, preventing people falling into poor health in the first place could help to reduce economic inactivity, increasing the number of people in work.
A coordinated whole-government strategy is required to improve the nation’s health and a fresh commitment to a health disparities white paper would provide an opportunity to set this out. But, more immediately, the evidence points to funding public health properly.
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