Politicians seeking votes are promising ever more money for the NHS. But there may be better ways to rescue the service from its decline. Simon Wilson reports
What are the parties proposing?
The Conservatives say they will be providing a "record £34bn per year by the end of the parliament in additional funding for the NHS", and that between 2018 and 2023 they will have "raised funding for the NHS by 29%". By the end of the parliament, that amounts to "more than £650m extra a week", according to the party's manifesto. In terms of staffing, the party promises to deliver 50,000 more nurses, 6,000 more GPs and 6,000 more primary-care professionals such as physiotherapists and pharmacists. They also promise that when negotiating post-Brexit trade deals "the NHS will not be on the table. The price the NHS pays for drugs will not be on the table. The services the NHS provides will not be on the table." Labour says that the NHS would be on the table and released leaked minutes from initial UK-US trade talks that they say prove it.
Is it really a "record" funding boost?
No. It may be the biggest uplift in cash terms over five years but given the growing UK population and the effects of price inflation that isn't much of a claim. In real terms, the growth in NHS England's budget proposed by the Tories amounts to an additional £23.5bn a year, taking the total to £140.3bn by 2023-2024 (in today's money), according to the Institute for Fiscal Studies (IFS). That equates to real terms growth of 3.2% per year. To put this in context, it does mark a retreat from the years of austerity: the average real annual increase was just 1.3% between 2009-2010 and 2018-2019, despite the fast-growing population. However, it is still significantly lower than the long-run average annual increase in UK health spending of 3.6% per year (and far below the 2000s, when NHS spending grew by around 6% a year in real terms).
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
What about Labour?
They are proposing to spend rather more, though nowhere near the kinds of big real increases seen in the Blair-Brown years. By 2023-2024, Labour wants to increase spending on NHS England by an extra £3.2bn a year in real terms, to a total of £143.5bn (in today's money). That implies that Labour's annual spending on NHS England would be 2.3% higher than under the Tories. It also means the party is proposing real annual growth of 3.8% (on IFS figures), which is just above the long-term average. However, if you take the Department of Health and Social Care budget as a whole (including spending on capital investment and social care), Labour is proposing a more marked increase to £164.8bn (in today's prices) by 2023-2024, which is £25.5bn more than 2019-2020 implying a 4.3% annual real terms rise.
Is the NHS in crisis?
It is definitely showing the strain after ten years of below-par spending increases at a time when the UK population is increasing and ageing, and the costs in the medical and pharmaceutical sectors have surged ahead. The latest monthly performance data from NHS England for October made grim reading, with the service recording one its worst ever performances and missing key targets for emergency care, routine operations and cancer. The number of people waiting to start non-urgent treatment reached 4.4 million at the end of September, a 7% rise year-on-year. And 80,000 people in A&E departments waited more than four hours from the decision to be admitted a 63.4% surge. According to Richard Murray of the King's Fund, performance against the four-hour target "now stands at its worst level since records began, and this before winter has even started". Strikingly, only two out of 119 hospitals with a major A&E department met the target in October.
Will the funding increases help?
Returning real spending increases to around the long-run average should help to steady the ship. But the long-term issues affecting the NHS go much deeper than money. A major report by four UK think tanks last year compared healthcare provision in 18 similar rich countries. It found that Britain spends slightly less than the average (9.7% of GDP compared with 10.2%) and it rated the NHS reasonably highly for value for money and efficiency. But it found that "for the most important illnesses in directly causing death, it is a consistently below-average performer". We have only 2.8 doctors per 1,000 population, against an average of 3.6 in the countries surveyed. We have only 2.6 hospital beds per 1,000 population, compared to 4.5 on average. And we have higher than average rates of death among babies at birth or just after.
What could be done?
The challenge is to recruit and retain more doctors, says Paul Goldsmith on CapX. The shift to intensive monitoring and the target culture has lowered morale and frayed cohesion, and the excessive risk of litigation and the pensions relief fiasco (where older consultants were penalised for taking on more work) have sent doctors for the exit early. More broadly, there is the question of the NHS's funding model, which has been copied by no other European country. In the UK, it's assumed the only options are an NHS funded entirely from current taxes (in effect a transfer from the working-age population to retirees) or a US model of private medicine. There are other options.
Which ones might work?
Many healthcare experts argue that the model of subsidised social insurance found in many European countries still universal, still free at the point of use is far better equipped to adapt to a world in which longevity is rising and birth rates are declining. If it is politically impossible to introduce such a system in the UK, then at least the NHS should be forced to restructure, argues Simon Jenkins in The Guardian with an emphasis on decentralisation and greater local control, and the merging of physical and mental health with social care. "Health is too important and sensitive a service to be delivered by means of a corporate state juggernaut," he reckons. "Just as paying for it has been political, so now should be changing it."
-
Who is the richest person in the world?The top five richest people in the world have a combined net worth of $825 billion. Who takes the crown for the richest person in the world?
-
Top 10 stocks with highest growth over past decade - from Nvidia, Microsoft to Netflix, which companies made you the most money?
We reveal the 10 global companies with the biggest returns since 2013. One firm has posted an astonishing 9,870% return, meaning a £1,000 investment would now be worth almost £82,000.
