Heat rather than light has been the main output of this summer’s transatlantic healthcare comparisons.
But one valuable by-product was an unplanned speech on the NHS by David Cameron. It was, in some ways, the Conservative leader’s most thoughtful yet.
Modest real terms increases or not, the NHS will still face a marked deceleration in its purchasing power growth compared with the average 5.7 per cent a year between 1997-98 and 2010-11
He went out of his way to reassure that, with a change of government, there would be considerable policy continuity for the NHS:
“I know that reform has become a dirty word in the NHS. That is a real shame, because as in education, after a number of wasted years, the Labour government started moving in the right direction. So I think it would be quite wrong for me to stand here and pledge that we will undo everything Labour have done and start afresh… We will not persist with the top-down restructures and reorganisations that have dominated the last decade in the NHS… We believe we can make a big improvement in NHS performance - both in terms of quality and efficiency - within the structures that already exist. First, by extending the competition and patient choice that Labour have started… and second by focusing on real health outcomes rather than political process targets.”
So no “top-down restructures and reorganisations”. But GPs are to become the main commissioners (and did I see responsibility for out of hours care once again?) “instead of far-off bureaucracies soaking up funding”. Which presumably implies at least some restructuring of primary care trusts and strategic health authorities. And at the Department of Health too, as it is to become a “department of public health” and the NHS made more independent of ministers.
When Mr Cameron says he will learn from Labour’s mistakes, he should look particularly at two made in the first couple of years after the 1997 election.
One was throwing the baby out with the bathwater as GP fundholding was scrapped, which led to some of the most engaged GPs opting out of the commissioning process altogether. A new government would be well advised to avoid the mistake of throwing all the current commissioning arrangements up in the air in a “year zero” neutering of PCTs, ahead of developing more effective arrangements.
The other mistake was making an NHS funding commitment while in opposition for political purposes. In Labour’s case that was the decision to stick to the outgoing government’s spending plans for the first two years. There is little doubt the NHS would have performed more productively if it got steady real growth of, say, 3-5 per cent a year over the last decade, rather than the famine/feast funding swings of the 1990s and 2000s.
Is Mr Cameron’s commitment to real terms increases in NHS spending an equivalent politically driven pledge he may come to regret? The Daily Mail certainly thinks so: “At a time like this, it’s downright irresponsible to rule out cuts in any area - even one so dear to the nation’s hearts as the NHS”, it thundered, on the grounds that “after 12 years in which Labour has almost tripled spending, there’s quite as much waste in the NHS as elsewhere in the public sector”. Proof for that assertion? “How can anyone claim there’s no scope for cuts, when last year more managers than doctors were hired?”
This all points to two important paradoxes, both caused by the fact that the economic and election cycles are out of kilter.
The first is this. Modest real terms increases or not, the NHS will still face a marked deceleration in its purchasing power growth compared with the average 5.7 per cent a year between 1997-98 and 2010-11. So now is the time to start implementing some of the tough decisions needed to smooth the path to tighter times. Unfortunately, with an election due, the risk is that the year ahead is spent treading water so as not to frighten anyone.
We’ve been here before, in 2005. The result: decisions ducked and deficits induced. So whether they do more than merely keep the lid on pre-election NHS noise will be the key test of the combined leadership of the health secretary and NHS chief executive. The same holds true for NHS managers locally.
The second paradox also stems from the interaction between the recession and the political cycle. It is obvious that post-election there will be large spending cuts and/or tax increases. And protecting the NHS budget would intensify that requirement. The King’s Fund and Institute for Fiscal Studies estimate that for the three years beginning April 2011, a real terms freeze in NHS spending would imply cuts in other departments averaging 3.4 per cent a year. NHS real increases of 2 per cent could mean cuts elsewhere averaging 4.5 per cent a year. So there are some very tough trade-offs to strike. But at the moment both main parties appear to be incentivised by the upcoming election to downplay that fact and obscure from voters the decisions they intend to take.
So to summarise: action is needed now to get the NHS’s medium term finances in shape, but electoral considerations may serve to defer that action; and there is a real choice to be made about how best to sort out the public finances, which the political parties don’t want to talk about. Happy days.