Approximate read time: 15 minutes

On 24 October 2024, the House of Lords will consider the following topical question for short debate:

Lord Farmer (Conservative) to ask His Majesty’s Government whether they plan to review how the state funds hospices.

1. What do hospices do?

Hospices provide care for people from the point at which their illness is diagnosed as terminal until the end of their life.[1] Hospice care aims to provide holistic care to the person who is ill by looking after their medical, emotional, social, practical, psychological and spiritual needs, and to provide support to the person’s family and carers. Hospice teams may include doctors, nurses, healthcare assistants, social workers, therapists, counsellors, chaplains and trained volunteers.

Hospices also support children and young people who have been diagnosed with a life-limiting condition, and their families.[2] Some hospices are dedicated to caring for children and young people, some provide care for both adults and children, and some hospices are for adults only.

Most hospice care is provided at home, but it can also be provided in a care home, as an in-patient at a hospice or as a day patient visiting a hospice.[3]

Hospice UK is a national charity representing more than 200 hospices across the UK, including independent charitable hospices, two national palliative care charities (Sue Ryder and Marie Curie) and charities supporting NHS hospice services.[4] According to its statistics, in 2022/23, hospices across the UK provided palliative and end of life care to 300,000 people, and direct support services to 60,000 family members, friends and carers.[5] In the same period, 16,000 clinical and care staff were employed by hospices in the UK, including over 12,000 nurses and care staff and 950 doctors.

2. How are hospices funded?

Hospice care is free at the point of use but, unlike NHS care, it is not fully state-funded.[6] According to Hospice UK, the amount that hospices receive from government makes up around one third of their income, and the rest is charitably funded.[7] Hospice UK has calculated that it costs £1.6bn each year to run the hospices in the UK.[8] Hospices receive less than £0.5bn from government and raise the remaining £1.1bn themselves. In contrast, palliative and end of life care delivered through the NHS is fully state-funded.[9] This includes specialist care delivered through secondary care and NHS-led community units, and ‘non-specialist’ or universal palliative and end of life care, for example delivered by GPs and district nurses.[10]

In England, the most common route for adult hospices to receive money from the government is funding delivered via integrated care boards (ICBs).[11] ICBs are NHS organisations responsible for planning health services for their local population.[12] There is one ICB in each of the 42 integrated care system areas within the NHS in England. The Health and Care Act 2022 created a requirement for each ICB to commission palliative care services for its local area.[13] Hospices receive money for services they have been contracted to provide by an ICB.

In addition to this, some hospices also receive funding from local authorities, often for providing a specific service.[14] For instance, a local authority could fund a hospice to provide domiciliary care services.

As part of the NHS Covid response, around £356mn was provided to hospices to secure and increase NHS capacity and enable hospital discharge.[15] Hospice UK said that including extra Covid support, in England government funding met 62% of adult hospices’ expenditure in 2021 and 47% in 2022.[16]

Between 2007 and 2024, NHS England provided funding for children’s hospices through the children’s hospice grant.[17] This provided approximately £15mn in 2020/21, £17mn in 2021/22, £21mn in 2022/23 and £25mn in 2023/24.[18] NHS England announced in 2023 that 2023/24 would be the final year of the grant. However, for 2024/25, NHS England provided an additional £25mn for children’s hospices, maintaining the level of grant funding from the previous year, to be distributed via ICBs.[19] The Labour government said in July 2024 it was “currently considering the future of this important funding stream beyond 2024/25”.[20]

The Conservative government said in April 2024 that £23mn of separate, further investment in children and young people’s palliative and end of life care, including hospices, had been made by the NHS. This was set out in the NHS’s ‘Long term plan’, in which it committed to providing match-funding for clinical commissioning groups (the precursor to ICBs) and ICBs.[21]

3. Pressures on hospice funding

The hospice sector has reported that it is under financial pressure. Hospice UK estimated in September 2024 that the sector is heading for a deficit in the region of £60mn for the current financial year.[22] The organisation said that the 2023/24 financial year “was by a distance the worst financial year we have ever seen for the hospice sector”. It said it was “therefore very concerning that the first quarter results in 2024/25 have been significantly worse than for the same period last year”.

Hospice UK identified rising costs as “the key issue driving the continued financial challenges in the finance sector”.[23] It said the average hospice’s costs had increased by around 20% in the past two years, which it described as “unsustainable”.

Staffing costs are a key concern for hospices. Hospice UK reported that staff costs are the most significant costs for hospices, representing around 71% of an average hospice’s expenditure.[24] Hospice UK warned in July 2024 that pay rises in the NHS could have a negative impact on hospices under the current funding arrangements. Toby Porter, CEO of Hospice UK, said the organisation supported the government’s decision to accept the recommendation of a 5.5% pay rise for NHS staff.[25] However, he assessed that it would cost the UK hospice sector around £66mn to keep pace with this in order to attract and retain a skilled workforce. He said it was “not feasible” for the sector, already in a “precarious financial position”, to fund this through community fundraising and hospices would therefore have to cut costs further. In the same month, Hospice UK said that at least a fifth of UK hospices had already cut services in the past year or were planning to do so.[26] This included cutting inpatient beds, reducing services in the community such as home visits to patients, and making health and social care staff redundant.

At the same time, Hospice UK highlighted that the demand for hospice care is growing, for several reasons:

  • More people are dying in the UK. After decades of a stable, slightly declining death rate, demographic trends mean that the annual number of deaths—currently approaching 650,000—is steadily increasing. It will reach 780,000 in 2040.
  • Our ageing population means that more and more people are living with complex, long-term conditions such as frailty and dementia, which require specialist management.
  • Medical advances mean that more children are being born and living longer with life-limiting conditions.
  • There is greater demand for services such as counselling and bereavement care, as the importance of these interventions is increasingly understood.
  • There is growth in demand for hospice care services to be delivered in different locations, including hospices, homes, hospitals, care homes, and virtually.
  • There is pressing need to reach currently underserved communities and people who are missing out.
  • There is greater demand being created by pressures on other health and care services, which threatens to leave hospices to fill the gaps.[27]

Together for Short Lives, a children’s palliative care charity, reported similar pressures facing children’s hospices specifically. It found that inflation, higher energy prices and the rising cost of recruiting and retaining skilled staff meant that, on average, children’s hospices in England spent 15% more in 2023/24 compared to 2021/22.[28] It said that over the same period, children’s hospices had received 31% less funding from ICBs and 11% less funding from local authorities.[29] Meanwhile, there was growing demand for services: since 2019/20, children’s hospices had provided end of life care and symptom management to 41% more children and 72% more young people, and step-down care to 41% more children and young people.[30] Together for Short Lives estimated that there would be a total shortfall of just over £30mn across all children’s hospice organisations in the UK for 2024/25.[31]

4. Recommendations for changes to the current funding model

Hospice UK has called for there to be “sufficient and sustainable funding for hospices to deliver care for everyone who needs it, including fair and consistent funding from national governments”.[32] To achieve this, it said in its strategy document for the next five years that it would work with decision-makers in the four nations to secure “sustainable, long-term, statutory funding solutions […] built on the value and contribution made by hospices to the wider health and care system”. It envisaged that statutory funding would continue to sit alongside other sources of income; for instance, the strategy document also set out plans to deliver a national bequests campaign to help build a long-term funding stream for hospices.

Together for Short Lives has called on the government to review the way in which children’s hospice care is funded to ensure it is “equipped to provide lifeline care and support to seriously ill children and their families for the long term”.[33] It sought a commitment from the government to maintain a ringfenced children’s hospice grant, to increase it in line with inflation and to return it to being a centrally distributed funding stream.

The All-Party Parliamentary Group (APPG) on Hospice and End of Life Care published a report on government funding for hospices in January 2024.[34] Hospice UK provided the secretariat support to the APPG. The APPG found the hospice sector’s reliance on fundraising for most of its income “carries huge risk” as “the volatility of this income makes it hard to plan for the future and puts services perpetually at risk”.[35] It also found this funding model “deepens socio-economic inequalities” as communities in the most economically deprived areas were less likely to be able to donate to their local hospice than those in more affluent areas and this could affect local service provision.

The APPG said ICB commissioning of hospice services is “currently not fit for purpose”, despite the introduction of a legal requirement to commission palliative and end of life care.[36] It pointed to issues such as local contracts not covering the costs of core clinical services and not keeping pace with inflation, levels of funding for hospices varying significantly across the country and even between neighbouring hospices, variation in the total amount each ICB spends per capita on palliative and end of life care and variation in what types of services are funded by ICBs.[37] The APPG described a “postcode lottery” in the palliative and end of life care populations can access.[38]

The APPG found that hospices had differing views on the percentage of their total income that government sources should provide.[39] It said many hospices found having a charitable arm allowed them to be flexible with the services they offered, and fundraising helped strengthen connections with the local community. However, the APPG argued that “core clinical services that would otherwise need to be provided by the NHS should not be subsidised by local communities”.

The APPG made several recommendations aimed at ensuring consistent and fair funding. It called for the government to:[40]

  • Produce a national plan to ensure the right funding flows to hospices. This should include measures that support ICBs with their commissioning decisions now and help evolve a truly sustainable hospice funding model in the longer term.
  • Conduct or commission a piece of work to understand the costs of providing different models of palliative and end of life care, with the long-term aim of developing reference costs on palliative and end of life care that can be used by commissioners.
  • Develop national quality standards and agreed outcome measures which commissioners can use to assess the quality of the services they are commissioning.
  • Set out a national minimum standard for the level of provision of palliative and end of life care that must be provided within all ICBs.
  • Address the immediate pressures of paying increased staffing costs for hospices by providing emergency funding and thoroughly consider the impacts on the hospice sector within the NHS pay review process each year.
  • Ringfence the £25mn provided by the children’s hospice grant to ensure it reaches its intended destination and commit to maintaining this grant for the next five years.

The House of Commons Health and Social Care Committee looked at the funding of palliative and end of life care as part of its inquiry into assisted dying/assisted suicide.[41] It said that palliative and end of life care should be “universal and easily accessible for all” but improvement to services would not be possible unless they were funded to keep up with demand. The committee heard evidence from many witnesses who questioned whether charitable funding should be required to provide such vital care. However, the committee also found that some hospice leaders valued the flexible nature of the current funding model, for instance because it allowed them to innovate and to provide a broader range of services beyond those with a ‘medical’ focus. The committee said that “rather than suggesting the government funds 100% of hospice operations, we call on the government to commit to an uplift of funding to guarantee that support will be provided to any hospices which require funding assistance”.

A number of MPs and 30 hospices are among tens of thousands of signatories to a recent petition calling on the government to allocate £100mn each year to hospices from fines levied by the Financial Conduct Authority on financial institutions and individuals.[42]

5. Government position

5.1 Previous Conservative government

The previous Conservative government did not commit to implementing the House of Commons Health and Social Care Committee’s recommendation for guaranteed funding assistance for any hospice that required it.[43] In its response to the committee report, the Conservative government set out the state funding hospices already received through ICB commissioning, other support from NHS England, the children’s hospice grant and matched funding for children’s palliative care under the NHS long-term plan. It argued that the current funding model reflected the position of hospices within the wider landscape of palliative and end of life care:

Most hospices are charitable, independent organisations which receive some statutory funding for providing NHS services. The amount of funding hospices receive is dependent on many factors, including what other statutory services are available within the ICB footprint. Charitable hospices are autonomous organisations that provide a range of services which go beyond that which statutory services are legally required to provide. Consequently, the funding arrangements reflect this.

Due to the way the hospice movement organically grew, hospice locations were largely not planned with geographic or demographic purposes as a driving force. Therefore, there are disparities with access to hospice services, especially for those living in rural or socio-economically deprived areas. However, the majority of palliative and end of life care is provided by NHS staff and services, commissioned to meet the needs of their local population.

Speaking in April 2024, Helen Whately, the then minister for social care, said future funding for hospices and end of life care would depend on the next spending review.[44]

5.2 Labour government

In its manifesto for the 2024 general election, Labour wrote about the need to integrate health and care services to improve treatment.[45] It said more care should happen outside hospitals. To this end, it said it would trial neighbourhood health centres by bringing existing services, which could include palliative care, under one roof. Stephen Kinnock, the minister for care, repeated in October 2024 that the Labour government was determined to shift more healthcare out of hospitals and into the community.[46] He said palliative and end of life care, including hospices, “will have a big role to play in that shift”.

Mr Kinnock also repeated the point made by the Conservative government that hospices are independent organisations and the amount of statutory funding they receive for providing NHS services “will, in part, be dependent on the breadth of a range of palliative and end of life care provision within their ICB footprint”. He said he was in discussions with NHS England about how to reduce inequalities and variation in access to, and quality of, end of life care. He said the next steps, including funding, would be considered “in the coming months”.

6. Read more


Cover image by 🆓 Use at your Ease 👌🏼 from Pixabay

References

  1. NHS, ‘Hospice care’, accessed 15 October 2024. Return to text
  2. Eilis Keeble et al, ‘Support at the end of life: The role of hospice services across the UK’, Nuffield Trust, May 2022, p 5. Return to text
  3. NHS, ‘Hospice care’, accessed 15 October 2024. Return to text
  4. Hospice UK, ‘Hospice UK strategy 2024–2029: Hospice care for all, for now and forever’, April 2024, p 3. Return to text
  5. Hospice UK, ‘Key facts about hospice care’, May 2024. Return to text
  6. Hospice UK, ‘Hospice UK strategy 2024–2029: Hospice care for all, for now and forever’, April 2024, p 3. Return to text
  7. All-Party Parliamentary Group on Hospice and End of Life Care, ‘Government funding for hospices’, January 2024, p 8. Return to text
  8. Hospice UK, ‘Key facts about hospice care’, May 2024. Return to text
  9. House of Commons Health and Social Care Committee, ‘Assisted dying/assisted suicide’, 29 February 2024, HC 321 of session 2023–24, p 86. Return to text
  10. As above, pp 72 and 86. Return to text
  11. All-Party Parliamentary Group on Hospice and End of Life Care, ‘Government funding for hospices’, January 2024, p 8. Return to text
  12. NHS England, ‘What are integrated care systems?’, accessed 17 October 2024. Return to text
  13. Health and Care Act 2022, s 21. Return to text
  14. All-Party Parliamentary Group on Hospice and End of Life Care, ‘Government funding for hospices’, January 2024, p 8. Return to text
  15. House of Commons Health and Social Care Committee, ‘Assisted dying/assisted suicide: Government response to the committee’s second report’, 9 May 2024, HC 744 of session 2023–24, p 4. Return to text
  16. Hospice UK, ‘Hospice accounts’, 2023, p 24. Return to text
  17. All-Party Parliamentary Group on Hospice and End of Life Care, ‘Government funding for hospices’, January 2024, p 8. Return to text
  18. House of Commons Health and Social Care Committee, ‘Assisted dying/assisted suicide: Government response to the committee’s second report’, 9 May 2024, HC 744 of session 2023–24, p 4. Return to text
  19. House of Commons, ‘Written question: Hospices: Finance (1180)’, 30 July 2024. Return to text
  20. House of Commons, ‘Written question: Hospices: Children (764)’, 31 July 2024. Return to text
  21. House of Commons, ‘Written question: Hospices: Finance (20154)’, 15 April 2024. Return to text
  22. Hospice UK, ‘Hospice financial benchmarking report’, September 2024, p 4. This figure is based on a benchmarking survey in which 94 hospices participated; not all hospices answered every question. Return to text
  23. As above, p 3. Return to text
  24. As above, p 10. Return to text
  25. Hospice UK, ‘Hospice UK responds to the announcement of an NHS pay rise’, 29 July 2024. Return to text
  26. Hospice UK, ‘Urgent call to save end of life care as 20% of hospices threatened by cuts’, 16 July 2024. Return to text
  27. Hospice UK, ‘Hospice UK strategy 2024–2029: Hospice care for all, for now and forever’, April 2024, p 5. Return to text
  28. Together for Short Lives, ‘Children’s hospice services under threat as NHS funding falls’, 19 June 2024. Return to text
  29. Together for Short Lives, ‘Short lives can’t wait: Children’s hospice funding in 2024’, June 2024, p 3. Return to text
  30. As above, p 4. ‘Step-down’ care is short term, community-based accommodations which supports the move of individuals from inpatient services back to the community. Return to text
  31. As above, p 5. Return to text
  32. Hospice UK, ‘Hospice UK strategy 2024–2029: Hospice care for all, for now and forever’, April 2024, p 9. Return to text
  33. Together for Short Lives, ‘Short lives can’t wait: Children’s hospice funding in 2024’, June 2024, p 5. Return to text
  34. All-Party Parliamentary Group on Hospice and End of Life Care, ‘Government funding for hospices’, January 2024. Return to text
  35. As above, p 9. Return to text
  36. As above, p 3. Return to text
  37. As above, pp 16–19. Return to text
  38. As above, p 18. Return to text
  39. As above, p 24. Return to text
  40. As above, p 5. Return to text
  41. House of Commons Health and Social Care Committee, ‘Assisted dying/assisted suicide’, 29 February 2024, HC 321 of session 2023–24, pp 86–8. Return to text
  42. Civil Society, ‘Former charities minister calls on government to allocate FCA fines to hospices’, 15 October 2024; Change.org, ‘Save the first £100mn of FCA bank fines for hospices’, accessed 17 October 2024; and Mattie Brignal and Fran Ivens, ‘Give £100mn to hospices to say sorry, Nigel Farage tells banks’, Telegraph (£), 14 October 2024. Return to text
  43. House of Commons Health and Social Care Committee, ‘Assisted dying/assisted suicide: Government response to the committee’s second report’, 9 May 2024, HC 744 of session 2023–24, p 4. Return to text
  44. HC Hansard, 22 April 2024, col 753. Return to text
  45. Labour Party, ‘Labour Party manifesto 2024’, p 99. Return to text
  46. House of Commons, ‘Written question: Hospices: Finance (7037)’, 14 October 2024. Return to text