Let’s be honest, speculation is fun. Nobody can prove you right or wrong at the time, people forget what you said, and you can hedge your bets on what the future will hold. It is also more interesting to look at the gloomy version – what fun is there to be had if all you can see is the broad sunlit uplands.
John Appleby charts one plausible, dismal, future. We should all hope reality turns out better. The NHS might return to real terms spending growth, perhaps matching long term GDP growth of 2 per cent, or even more.
All governments seem disposed to give the NHS preferential treatment when it comes to spending. The service’s success may well rely on how far the government has “rebalanced” the public sector, changing what and how it delivers and therefore how much is spent on individual programmes.
But it would not be right to think of the next four years as a blip with funding and services then picking up much as before. History, and the state of the public finances, suggests public spending in general and the NHS in particular face a long squeeze – perhaps for much of the rest of the decade.
And if there is extra money available, history again suggests the first call on that will be pay. By 2015 there will have been several years of little or no growth in individual pay packets. Real incomes and living standards will have dropped, as Mervyn King keeps reminding us.
Perhaps pay can be kept down for the rest of the decade, but precedent is against it. Pay restraint is going to make a significant contribution to saving £20bn by 2015. In the second half of the decade the reverse is more likely to be true.
One way of approaching this would be to develop much stronger local pay arrangements, consistent with the move to more independent provider units and a more market oriented approach. Pay and staffing would become more closely associated with the success of a unit and local productivity.
The traditional policy approach to achieving greater efficiency in the NHS, apart from tight financial settlements, has been to restructure. Each of the main restructurings since 1990 has aimed at doing this. Some have also targeted management costs. It will be hard to know where to go in 2015.
Numbers of commissioning consortia could be reduced but management costs will already have been cut. The more radical choice would be to abandon the purchaser/provider split, but savings there could be as illusory as those imagined from ending the “internal market” in 1997.
The truth is, by 2015 any changes that emerge from the current bill will only just have taken hold. If much greater efficiency is to flow from them it will be in the second half of the decade, not the first. (The converse of this, of course, is that it will be up to providers to shoulder much of the burden of achieving the £20bn, not new commissioners or greater competition.) Those in charge may just have to hold their nerve. If it works we will have found the answer all western countries are looking for.
Continuing the quality, innovation, productivity and prevention programme could be essential. It would be a fantastic achievement to deliver £20bn savings and keep quality up. The trouble is more efficiency gains will be required. So expect to see even greater focus on treatment and referral thresholds
At the top and bottom of this list, however, is a simple point. The service cannot keep delivering efficiencies at the same punishing rate. It will need more money if it is to keep pace with demand and medical technology. The proper funding of the NHS is not something that should be fudged or dodged. It is the critical long term issue.
Some western countries have managed to hold constant their share of GDP spent on healthcare. We did for a while – at some cost to the quality and quantity of services provided. But in the end it has drifted up.
Ministers will ultimately have the unenviable choice of significant increases in public spending on the NHS, despite the genuine needs of other departments, or finding some alternative approaches to funding. What the Dilnot review says about financing social care and how the boundary between health and social care blurs may become increasingly relevant. The alternative would be to preside over decline.