Norman Warner welcomes the government's willingness to consider an independent review of NHS funding
We have just completed an election campaign, during which undying love was professed by all sides for the NHS. More money was even promised – £8bn to be precise – over the life of this Parliament. But that may well not be enough given the rapidly deteriorating finances, with a £2bn shortfall a real prospect for the current financial year. The NHS now faces a lengthy and linked cash and care crisis stretching well into the next decade.
On the care side, we at least have a plan – the ‘Five Year Forward View’ – and a Chief Executive capable of implementing it, if allowed to do so. But the NHS does have to be turned round very fast, with much more emphasis on preventing ill-health and much more care and treatment provided in the community rather than in hospitals. Staff need to work in radically differently ways, especially to avoid what can sometimes feel to the public like a Luddite approach to technology. The budgets and care delivery of the NHS and social care must be integrated – rapidly, and nationally and locally. Unchanging and failing providers have to be replaced much faster, with a willingness to use competition to do this. 60% of the public don’t care if their NHS services are provided by the public or private sector.
The key question is will the Five Year Forward View resolve the NHS’s major productivity problem, whereby it produces the wrong services in the wrong way and in the wrong places. For the plan to work with just £8bn extra funding, the NHS needs an annual productivity gain of about 2.3%, stretching over the next decade. The best it has achieved in any recent years is 1.5% and the average for the last Parliament was under 1%. Most of this was done by curbing staff pay – a policy to be continued for the rest of this Parliament. The acute and specialist hospitals are the worst offenders, with an annual productivity gain in recent times averaging 0.4%.
The jury must definitely be out as to whether the NHS – even under its new leadership – is capable or willing to deliver the £22bn of productivity gain by 2020 promised in the Five Year Forward View. If the NHS fails, as I think it will, does the government increase borrowing, cut other public services further or raise taxes? Without any of these, it will have to face up to finding new streams of revenue or reducing the NHS service offer. Even if, as I think unlikely, the NHS manages to wriggle its way through to 2020 without making hard choices on funding, the Office of Budget Responsibility forecasts show that the financial challenges last much longer than this Parliament.
Our tax-funded, largely free at the point of clinical need NHS is rapidly approaching an existential moment, with a 2014 British Social Attitudes Survey showing over half the public thinks the NHS wastes money. Now is the time for a wise government to begin a process of helping the public engage in a discourse about the future funding of the NHS. To do that requires a measure of cross-party agreement on some form of authoritative independent inquiry that could produce both an analysis of the problem and some options for a way forward. It may well be that general taxation continues to be the mainstay of funding for future decades but at least we should have a less partisan view of some alternatives.
The start of a new Parliament could well be the right time to start this process, for government and opposition alike. The NHS is far too important to be turned into a political football. In a Lords debate last Thursday, the Minister undertook to reflect further on some form of authoritative independent review of NHS funding but understandably not a lengthy Royal Commission. I believe Labour should respond positively.
Lord Norman Warner is a backbench Labour Peer and a former Health Minister
Published 13th July 2015