Booms and Bailouts

By seventy years of age it is usual to have become a little less demanding of presents. The appetite of the huge lobby groups that have built around the NHS since its first crisis in the 1940s shows no such humility. Every few years since the creation of our health service a new estimate of essential taxpayer support, always of eye-watering proportions, is produced. Indeed, the first such crisis of funding and staffing came within months of the birth of the NHS. Bevan’s response, and that of every health minister since, was to point to satisfied patients and accuse the naysayers of gross disloyalty.

Bevan went to Parliament making it clear, however, that the bail-out he needed would not go wherever the NHS lobby desired: “I am anxious that the money be not spent on the persons who can organise themselves into loud pressure lobbies, and get their columns in the press, but on the patients who have to make use of this Service”1

Tony Blair rejected this calculated approach to spending “new money”. The boom years that briefly followed his arbitrary announcement that health spending would rise to the European average share of GDP, were dominated by the demands of one special interest after another. It drove up NHS costs for the long term and allowed the service to dodge essential reform. A huge reform opportunity was missed. Boom produced the inevitable bust from 2008, leaving the health service struggling with costs and quality, and with the major challenges of public health worsening. Even the Commonwealth Fund, staunch critics of the US health system and supporters of the NHS, placed our NHS tenth out of eleven in its ranking of health systems on “health care outcomes”, only just beating the US.

Despite this abject failure on health subsequent bail-outs have gone wherever the NHS lobby has wished. They have even been front-loaded in response to promises to invest in systemic reform, none of which have been delivered at scale. Front-loading has simply fuelled the demands for more funding once the fallow years arrive.

Social care and other contributors to public health have been robbed in order to feed the NHS. The real consequences of doing so, year after year, are now very plain to see. The one recent chink of light in this sorry 70-year saga has been Jeremy Hunt’s totemic demand to add social care to his job title. The forthcoming funding announcement will reveal whether this is spin or substance.

What the NHS needs is a stable funding commitment. Just as the Bank of England has a core commitment on inflation, so the health system (in its widest sense) should have a firm commitment to 2% real annual growth; exactly the growth rate identified in the mid-1980s by the health economist Nick Bosanquet as being necessary to keep pace with the demands of technological change and an ageing population. Any more and productivity suffers, any less and service suffers.

It is ironic that tax funding of the NHS has produced what is probably the world’s most volatile system for health funding. No large organisation could operate effectively on its random bust-boom cycle. Devoid of the tools of a mainstream social insurance system to adjust entitlements, deductibles, and subscription rates it lacks any sustainable response to socio-economic change.

A cross-party commitment to sustained, real funding growth of 2% a year for health (not the NHS) would provide the basis for the first sensible discussion of how the funding is raised. That would be the best 70th birthday present for the NHS.

 

  1. HC Hansard 17 Feb 1949 Vol 461 Col 1461

Dr Tony Hockley

Dr Tony Hockley is a Visiting Senior Fellow at the Department of Social Policy at the London School of Economics & Political Science. He is Director of Policy Analysis Centre Ltd and the co-author of Politeia’s Working Systems: Towards Safer NHS Nursing (2014) and A Premium on Patients: Funding the Future NHS (2010).

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