The government is under fire, not just from junior doctors but from health economists, for failing to spend enough on the NHS
FOR the first time in 40 years, junior doctors (ie, those below consultant level) in the National Health Service have voted to go on strike for several days next month. The government is proposing a new contract to hit its declared target of a fully staffed seven-day service, including in the evenings and at weekends. It insists that three-quarters of doctors will be better off as a result. But the British Medical Association, the doctors’ trade union, has broken off talks, claiming that some juniors will lose pay under the new contract.
The NHS, created by a Labour government in 1948, is always problematic for the Conservatives. That may explain why the health secretary, Jeremy Hunt, tries so hard to keep out of the news. It was also one motive for a big reorganisation in 2012-13. The setting up of an NHS executive for England, of clinical commissioning groups led by general practitioners and of trusts to run larger hospitals, was aimed not just at improving efficiency by shifting resources from acute services to primary care and prevention. It was also meant to break with the notion that failings in the NHS are always the government’s fault.
Yet the impending junior doctors’ strike shows how hard it is to depoliticise health, because underlying it is one big issue: money. Since it is almost entirely taxpayer-financed, the NHS budget must be set by the government. The Tory manifesto promised to maintain health spending in real terms, ring-fencing it from public-spending cuts. It also offered an extra £8 billion ($12 billion) to the NHS budget by 2020-21. But Chris Hopson, chief executive of the NHS Providers trade association, says that, despite this, the service is in the middle of the longest and tightest squeeze in its history.
That is in part because demand for health care increases inexorably every year. An ageing population, new technology and drugs, and a rise in obesity and alcohol consumption all play a part. But a bigger factor is that, after a decade of hefty budget increases, health-care providers have had to tighten their belts in the past five years. Under Labour between 2000 and 2010, spending almost doubled in real terms, says John Appleby of the King’s Fund, a think-tank. Since then growth has fallen to barely 0.8% a year, the slowest rate since the second world war.
The government reckons that greater efficiency is possible, notably in procurement, and that tight budgeting is the best way to secure it. The five-year forward view that the NHS executive drew up last year found a funding gap of £30 billion by 2020-21. To make the numbers add up after the promised injection of £8 billion, the service is supposed to deliver £22 billion-worth of efficiency gains. Yet the easiest savings have already been made, and the new target is bigger than ever before. Some argue that more investment is needed for more efficiency gains. The chairman of the NHS executive, Simon Stevens, is accordingly asking George Osborne, the chancellor, to front-load his £8 billion increase in the forthcoming public-spending review.
Moreover, many hospital trusts are already in deficit. By halfway through this financial year, some three-quarters were said to be running deficits, at a combined level that may go as high as £2 billion. Excessive spending on agency staff is one culprit. But the accumulation of deficits, which big hospitals can run even if local authorities cannot, is widely seen as a sign of a system that is close to breaking point.
What makes matters worse still are sharp cuts in local-authority social care. These mean that more elderly (often demented) patients are being kept in hospital beds for longer. The NHS is already channelling some cash to local authorities to avert this. As Norman Warner, a former Labour health minister, points out, hospital care is far more expensive than social care, so this transfer of NHS money makes sense. Stephen Dorrell, a former Tory health minister who is now chairman of the NHS confederation of health providers, is calling for spending on social care to be ring-fenced along with the NHS.
International comparisons support the argument that British health spending is low. After the large increases under Labour, Britain moved closer to the average for the OECD club of mostly rich countries, but it has since fallen back. Indeed, now that the economy is growing again, health spending in Britain is actually falling as a share of GDP, which is highly unusual for any rich country given rising demand.
Thanks largely to this parsimonious funding, the NHS is rated by most economists as highly efficient. Yet the OECD’s latest “Health at a Glance 2015” report finds that its record on patient care is not that impressive. On a range of indicators, from fatalities after heart attacks to asthma admission rates to cervical, breast and colorectal cancer survival rates, Britain does badly compared with other rich countries. The NHS is also missing many of its own targets for such things as accident and emergency admissions, cancer referrals and ambulance response times. Nigel Edwards of the Nuffield Trust think-tank concludes that lower investment in health care in Britain is matched by “mediocre performance across the board”.
All this adds up to a powerful argument for more spending. A new report, “Filling the Gap”, by the Health Foundation, an independent charity, concludes that a new joint shortfall for the NHS and social care together, on top of the one identified in the five-year view, will be £8 billion by 2020-21 and £22 billion by 2030-31. Yet such big numbers invite two hard questions. The first is: how much spending is enough? The scope for more health spending, especially on higher pay, is almost infinite. The NHS already employs one in 18 workers in Britain. Projections 50 years out suggest that ratio could easily rise to one in eight. And it is hard to raise productivity in such a people-intensive service.
The second question is where to get the money from. The Health Foundation report suggests deferring the government’s budget-surplus target or raising taxes, especially “sin taxes” such as those on tobacco or alcohol. Others tout a hypothecated tax, perhaps giving national-insurance contributions to the NHS. It is also striking how little Britain raises privately for health care, suggesting that there is scope for more patient charges, including for doctor consultations or hospital stays. Such co-payments are common in social-insurance systems.
It has often been said that the only subject health ministers ever discuss with the medical profession is money. As he prepares for the junior doctors’ walkout and for another tough public-spending round, Mr Hunt seems destined to find that to be truer than ever.