# The Impact of Devolution on Local Health System Financing: A Synthetic Difference-in-Differences Study of Greater Manchester, England

## TL;DR

This study examines how devolving health and social care powers to Greater Manchester affected local health system spending compared to other areas in England.

## Contribution

The study evaluates the impact of devolution on total health and care system expenditure, including resource transfers across services.

## Key findings

- Total annual health and care expenditure in Greater Manchester increased by £66.58 per capita post-devolution.
- Social care spending increased in the third and fourth years after devolution.
- NHS-managed expenditures showed short-term shifts, including reduced Continuing Healthcare spending and increased acute healthcare spending.

## Abstract

Determining the effects of devolution policies through health system financing is pivotal in understanding their impact. Few existing studies have considered total health and care system expenditure, overlooking the transfer of resources through spending in different services locally. We evaluated the impact of devolution in Greater Manchester (GM), an area in England which received devolved health and social care powers from 2016, on the whole system of local public expenditures on health and care.

Using data on public health and care spending for 149 local health systems between 2013 and 2020, we estimated synthetic difference-in-differences (DiD). We compared expenditure in total and by services for ten GM localities relative to a weighted combination of localities from the rest of England (excluding London) for four years post-devolution. We analysed expenditures in per capita terms and as a share of total expenditure. We investigated dynamic effects with an event study specification.

Compared with the synthetic control (SC) group, total annual expenditure on health and care increased in GM post-devolution by an average of £66.58 per-capita (95% CI: 11.85 to 121.30). Total expenditure on public health and social care, managed by Local Authorities, increased by £36.39 (95% CI: 6.99 to 65.80) and expenditure on social care specifically increased in the third and fourth years after devolution. We detected some short-term changes in expenditure managed by the National Health Service (NHS) Clinical Commissioning Groups (CCGs), including reduced expenditure on Continuing Healthcare and increased expenditure on acute healthcare and "other" miscellaneous expenditure. We did not detect a statistically significant effect for public health, primary care, community or mental healthcare.

Results suggest that additional resources were used to respond to existing pressures on the health system, and that to redirect expenditure substantial increase in resources or re-organisation of services may be required alongside devolution of sufficient powers.