In every UK election in recent years, the financial situation of the NHS has come pretty near the top of the list of concerns among voters. In 2015, the campaign is taking place against a backdrop of five years of financial austerity that has been seriously affecting public services, writes Professor Malcolm Prowle.
Although the NHS was deemed to be “protected” from the pressures of financial austerity, it was left with a tiny amount of growth in resources each year and was also given a target of making £22 billion of efficiency savings over a four-year period. This contrasts sharply with the first 62 years of the life of the NHS when it received substantial increases in funding each year (even if the voters weren’t always aware of this). Not surprisingly, the service is really feeling the strain.
A hand grenade
Now the former chief executive of the NHS, Sir David Nicholson, has thrown a hand grenade into the election campaign with his outspoken comments about the financial situation of the NHS. Among his comments were:
- The NHS has a substantial financial problem, particularly in the hospital sector. The scale of the problem is probably bigger than the one he inherited in 2006 on becoming NHS chief executive, when the health service had accrued a £1bn deficit under a Labour government.
- Politicians of all parties are talking about providing extra health services when there is already a huge “financial hole” in NHS finances.
- The planned NHS efficiencies of £22bn are a “big ask” for the NHS and failure to achieve them would lead to a “managed decline” of the NHS with patients waiting longer for treatment.
- The coalition government’s NHS reforms were a “surprise” and a “significant distraction”.
Many of the points raised by Nicholson have been known, for many years, by those of us in the health business who have written much on the subject of NHS sustainability. What is so incendiary about his comments is that not only is he one of the most respected health service managers of his generation but he was also the man in charge of the NHS over most of the life of the coalition government and was responsible for such things as the savings targets (known as the Nicholson targets) and the NHS reform process. For him to be saying these things now demolishes a lot of the credibility of government health policy.
A competition to promise the most
In light of these comments, what are the political parties putting forward in their manifestos about health policies? Well, we see a number of sensible (and some not so sensible policies) but the dominant issue is the funding of the NHS where there seems to be basically a competition between the political parties to see who can promise to spend the most extra money on the NHS.
It has to be said of course that this is money we haven’t got since, for several years to come, we will still be borrowing tens of billions of pounds each year to plug the hole in public finances and this borrowing will have to be repaid by our children and grandchildren who will bear the cost of our extravagance.
Fundamentally, the current NHS model of comprehensive service provision, free at the point of consumption and funded from taxation is financially unsustainable in the short term and the longer term. The various political party promises to find more money for the NHS are predicated on the UK having decent levels of economic growth (which will generate higher levels of tax receipts) but this may not happen.
On the same day as Nicholson made his comments, the IMF expressed scepticism about the future economic performance of the UK and the availability of tax receipts to finance the growth in public services such as health. This makes the promises being made a very risky bet.
It is sometimes said that the British aspire to Scandinavian (high) standards of public services on the financial base of US (low) levels of taxation. This can’t work and it is misleading to suggest that the circle can be squared through the generation of “efficiency” savings which, as Nicholson suggests (and I agree) are not going to happen. We have to make a choice of higher levels of taxation and/or higher levels of private financial contributions.
NHS needs consensus not point scoring
What is really needed is some form of party political consensus about the best way forward for the NHS instead of this ongoing competition to spend more public money which we don’t have. This means looking, with an open mind, at alternative funding options such as; charges, health insurance models (which operate perfectly well in other European countries) and earmarked taxes. However, the chances of this happening in the heat of the election campaign are approximately nil.
Whoever wins the election, we need to be prepared for the inevitability of such things in the NHS as longer patient waiting times, cuts in services, freezes on staff numbers and deteriorating buildings. And some broken promises.
It seems to me that irrespective of who wins the general election, the future for the NHS looks grim. However, I would be surprised if political behaviour has changed much by the time of the next election.
Professor Malcolm Prowle
Professor of Business Performance
Nottingham Business School
Nottingham Trent University
This article was originally published by The Conversation