The sums involved are colossal. With an annual bill of £149bn, health accounts for nearly 20% of government spending and is the second-largest chunk of the budget, behind social benefit. Why does the NHS keep asking for more?
The government protests that health spending is at record levels — which is true, strictly speaking. The rate of increase, however, has been slowing since 2010. The government will spend £123.7bn on health in England this financial year (health spending is devolved in Scotland, Wales and Northern Ireland). That figure will increase to £126.5bn by 2021 — an increase of only 0.75% a year once the effects of inflation are stripped out.
THE NHS IN NUMBERS
- £149bn The annual bill for running the NHS, 20% of government’s total spending
- 18% The proportion of people aged 65 or over compared with 16% 20 years ago
- £16bn The annual NHS drugs bill, down 50% thanks to a shift to generic medicines
The slowdown — from the roughly 4% average annual rise since the NHS was founded in 1945 — began with the government’s attempts to shrink the deficit in the wake of the financial crisis and has occurred as demand for healthcare rises faster than ever, thanks to a growing population and the development of expensive cutting-edge treatments.
An ageing population is also a burden: 18% of people are now aged 65 or over compared with 16% 20 years ago. That figure is forecast to rise to nearly 25% by 2046, as the population climbs to 76m.
NHS England chief executive Simon Stevens warned earlier last month that current funding plans must be “amended” to avoid damaging cuts to services. Australia and New Zealand have been hit by the worst flu season in years — if the same strain of the virus heads for Britain this winter, it could push the system to breaking point.
Health secretary Jeremy Hunt has said that a 1% pay cap for NHS staff will be lifted, but his officials worry that cash for wage rises will have to be carved from other areas of the budget unless Hammond comes up with more funding.
Andrew Foster, the chief executive of Wrightington, Wigan and Leigh NHS trust in northwest England, tweeted last month: “A perfect storm of funding and workforce shortages versus an abundance of patients. I see people everywhere working unbelievably hard.”
Next year, NHS funding per person is set to decline from £2,225 to £2,217 — the first year-on-year fall in recent history — according to John Appleby, the chief economist at the Nuffield Trust.
To keep up with growth of the economy — forecast at about 2% annually over the next five years — the government will have to raise spending by £13.2bn in real terms by 2023, according to research by the health charity. Keeping up with the existing rate of rising costs and demand would require an extra £17.6bn. “Traditionally, in periods where money has been tight, hospitals have allowed waiting times to grow,” Appleby said. “At the moment, we are seeing that in spades.”
The NHS constitution sets out that a minimum of 95% of patients arriving at A&E must been seen and treated in less than four hours, a target the service has missed for the past three years. The figure was just 89.1% last year. Waiting times for cancer care and operations have also risen sharply.
Experts say that A&E waiting times are a “canary in the coalmine” for stresses across the health system. If people cannot get an appointment with a GP to head off health problems, they may end up in the emergency room. And, if hospitals do not have free beds elsewhere, patients may end up parked in A&E.
In Birmingham, Marsh has presided over a turnaround at the children’s hospital, which was slammed eight years ago by health inspectors who said substandard care was “putting lives at risk”. In February, it became the first hospital of its kind to be given an “outstanding” rating by the Care Quality Commission.
However, Marsh says the funding crunch risks undoing much of the work done to waiting times since 2000. She manages a budget of £408m, a figure that has failed to keep pace with a steady 5%-6% annual increase in the number of patients attending her hospitals.
At Birmingham Children’s Hospital, “a few years ago, a busy day in A&E meant 150 people, now it’s 220”, Marsh said.
For now, the trust is one of a minority across the UK not in deficit. Collectively, trusts in England overspent by £770m last year, although that figure was flattered by a £1.8bn one-off bailout from central government. Without a slice of that extra cash, Marsh’s trust would be barely breaking even.
The temporary nature of some of the trust’s income makes it hard to plan for the future, she said: “We have three to four-year lead times to hire some staff. If I need more paediatric intensive care nurses, it takes time to train them. I can’t just go out and hire them, there aren’t any.”
Figures last week showing an 89% drop in the number of EU nationals coming to work as nurses or midwives in the UK will not make things any easier.
Healthcare chiefs asking for more cash is nothing new. Since former chancellor George Osborne embarked on his quest to balance the books in 2010, doctors and their managers have repeatedly cried foul.
Critics, however, insist the NHS needs to be leaner and more efficient. “It seems that there’s a feeling at the top of government that just pumping money into the system is no longer enough,” said Richard Lewis of the accountancy giant EY. “They want to see real change.”
He believes there is still room for improvement, despite productivity gains in recent years. For example, the NHS does not always get the most out of highly paid consultants and state-of-the-art medical technology.
A recent report by the regulator NHS Improvement showed that operating theatres at more than 100 English hospitals were going unused for more than two hours a day — time for up to 280,000 non-emergency operations a year.
The regulator called for more efficient planning to minimise late starts and early finishes.
The Royal College of Surgeons said the bottlenecks are often elsewhere in the system. For example, some procedures are held up due to delays in arranging social care in the community.
Even the NHS’s most ardent defenders admit there is room for improvement. “We all recognise that the model of healthcare set up in 1945 needs to adapt for the 21st century,” said Marsh.
Even so, many of the “easy wins” from improving efficiency have already been achieved during recent, straitened, times, according to Appleby at Nuffield Trust.
For example, the service as a whole has boosted bed occupancy rates in recent years to about 90%. Appleby also estimates that without the gradual shift to the use of cheaper generic medicines over the past 20 years, the NHS’s £16bn annual drugs bill would be twice as high.
“The problem with these improvements is that once you’ve done them, you can’t do them again,” he said.
In the context of a nationwide productivity crisis, there is some data to suggest that the NHS has not performed too badly. The most recent figures available from the Office for National Statistics show public sector healthcare output per hour grew for the fifth successive year in 2014, rising 2.3%.
The perception that the NHS is a bloated, inefficient monolith is also challenged by international comparison. A triennial study that was recently published by the Commonwealth Fund, a US think tank, said that Britain’s health system was the best of the 11 countries it studied, for the second time in succession.
The UK spends 9.9% of GDP on healthcare, slightly less than most big European countries and far below the 16.6% seen in America, which was ranked worst.
Some critics say the study, which gives great weight to healthcare access, flatters Britain’s system. The think tank ranked Britain 10th for “healthcare outcomes”, a category that measures how successful treatment has been. Cancer survival rates, for example, lag behind those in many other advanced economies.
Even so, the figures suggest Hammond cannot bank on big improvements in value for money as he contemplates the NHS’s predicament.
Whether or not the chancellor comes up with some extra cash, the current debate over healthcare funding seems a long way from last year’s referendum campaign, when an infamous slogan on the side of a bus promised a shot in the arm for the NHS.
“I don’t think anyone fully believed an extra £350m a week was coming,” said Marsh. “But to suggest it was, was disingenuous to staff in the NHS.”