Investing in health is not just the morally right thing to do, the numbers across Europe show it reaps economic benfits as well

NHS England has made it clear. An extra £30bn will need to be found, on top of the £20bn of savings that are already an NHS target. That’s £50bn to be saved by 2020. However imaginative and thoughtful, these cuts will damage people’s health. There will be deaths.

We know this because of the effects of austerity in other countries. It is clear that imposing austerity while cutting social, health and benefits support spending at the same time kills large numbers of people. The UK is doing all these things at once.

Consequences of cuts

A study exploring data from all local authorities shows 6.4 per cent fall in the number of people who received a council funded social care service, from 1,424,000 in 2011-12 to 1,333,000 in 2012-13. This followed a 6.7 per cent fall the previous year.

‘Investing in public services during a recession is the most effective intervention to prevent both health and economic meltdown’

The Towards Excellence in Adult Social Care report suggested it was likely that there has been a reduction in frontline publicly funded services for the last two years. It said: “In the known context of rising population needs, there is a clear possibility that fewer people are getting the support they need, and may be at increased risk.” Research by the Association of Directors of Adult Social Services suggested about 20 authorities had increased charges for care. This may have “deterred more people from having the support they need”, it said.

In Greece, where 35,000 clinicians lost their jobs, Athens cut its health service by 34 per cent and disability rules were made harsher, suicide rates rose by 20 per cent between 2007 and 2009. HIV and other infectious diseases rose. There was a 40 per cent increase in infant mortality between 2008 and 2010, and a 47 per cent rise in unmet healthcare needs.

In Iceland, however, which experienced perhaps the most profound financial crisis, outcomes were very different. Iceland’s social protection spending rose by 36 per cent including healthcare and debt relief for homeowners. This investment was underwritten by a democratic decision of the people. The numbers of houses receiving support rose by 75 per cent. Cardiac health, mental health and hospital admissions did not change. In fact, people described themselves as happier − there was a great deal of social solidarity. In 2012, Iceland’s economy grew by 3 per cent and its unemployment fell below 5 per cent.

In Italy, suicides have also been found to rise in the regions where social protection is weak.

Invest in the NHS now

We can now see that investing in public services during a recession is the most effective intervention to prevent both health and economic meltdown. Social protection can decouple the link between unemployment and suicide.

‘NHS England, don’t cut £30bn. Expand funding to the NHS. Even in conventional economic terms it is the right thing to do.’

Indeed investing specifically in health reaps economic rewards. The basic concept is that of a “multiplier”. David Stuckler, senior research leader in sociology at Oxford University, defines it as an estimate of how many dollars of future economic growth are created for each dollar of government spending. When the figure is more than 1, it means that each dollar of government spending creates more than a dollar of future economic growth.

Work has been done in Wales and on a global scale. The IMF last November agreed the fiscal multiplier for health is more than 1. In fact, Stuckler says that healthcare investment provides a much deeper stimulus to the economy than almost any other kind of government spending. In Wales, spending by the Aneurin Bevan Health Board Area during 2009-10 shows a multiplier of 1.78  (ie: for every £1 spent by the health board an extra 78 pence of output was generated). Shelter estimates the fiscal multiplier for housing is 3.5.

Healthcare leads to local jobs, less welfare is needed and money earned is spent locally.

And yet at least £2.9bn of Department of Health funding has been clawed back by the Treasury in the past two years. This is despite the NHS facing a funding settlement for 2011-12 to 2014-15 that is likely to mean its “tightest four year period in the last 50 years”.

Why not?

Why does the government continue in this path, knowing the consequences full well? We know the answer: ideology, corporate greed and corruption are all at play. Austerity is being used as a shield to shrink the state at scale and pace. Privatisation is part of a corporate scam to maintain profits by bleeding the statutory sector. And all this driven by a government whose hands are in the till with complex, deep and wide interests in the very private sector planning the gains.

So, NHS England, don’t cut £30bn. Expand funding to the NHS. Even in conventional economic terms it is the right thing to do.

Dr Brian Fisher is a retired GP and chair at the Socialist Health Association