There is no easy way to sort out the future of NHS finances, but the longer we delay the worse the situation will get, writes Anita Charlesworth

The Scottish referendum has given politicians across the three main UK parties a timely reminder of the electoral potency of the NHS. It was one of the big issues at the end of the campaign.

Nationally, over the next three weeks, the political parties meet for their last conferences before next year’s big Westminster election. The future of the NHS should be weighing heavily on their mind.

To rather less fanfare than the Scottish question, the various bodies overseeing the NHS in England (Monitor, the NHS Trust Development Authority and NHS England) reported this week on how things are progressing this financial year. It doesn’t make comfortable reading.

More than money problems

First there’s the money. It’s clear that if things carry on as they are, the NHS will almost certainly be in deficit this year. Over two-thirds of acute hospitals in England have failed to balance their books leaving a net deficit of half a billion this summer.

Anita Charlesworth

‘Over two-thirds of acute hospitals in England have failed to balance their books’

Alongside the money, the NHS is struggling to deliver on waiting times and other performance standards. The list of access targets that the NHS is failing to meet is growing longer.

In the first quarter of this financial year the NHS missed five of the key waiting times standards, including admitted patients starting treatment within a maximum of 18 weeks from referral, the number of patients waiting more than 52 weeks for treatment, and maximum of two month waits of urgent GP referrals for treatments.

In July, NHS and foundation trusts missed their four hour accident and emergency standard. In response to these, NHS England has earmarked £400m ordinarily used for “winter” planning and indicated that commissioners may buy operations from elsewhere to deal with the backlog.

Rhetoric and deficit

The NHS is showing signs of increasing stress. The data for the first quarter of this financial year give some clues as to the reasons: staff costs are still rising rapidly and hospitals fail to identify cost savings.

‘The more we allow the NHS to be a political football, the worse the outcome’

Meanwhile, despite all the rhetoric on shifting care out of hospital setting, the pressures on hospitals continue to rise. GP referrals to foundation trusts rose by 6 per cent in the first quarter compared to the same period last year.

To make matters worse, the deficit is in addition to the £2bn hole in the NHS budget for 2015-16.

No easy answers

So what should politicians consider in order to get the NHS back on a firmer footing? Doing nothing simply isn’t an option. I would argue for four things:

  • More money in 2015-16: NHS England and Monitor say the NHS faces an affordability gap of 6.6 per cent next year. With six months to go it is inconceivable that the NHS could bridge that gap without quality and access suffering in a very obvious way.
  • As recommended in the Health Foundation’s More than money: closing the NHS quality gap report this week, a long term programme of genuine change to how services are delivered financed by a “transformation fund”. This will ensure that the public can be confident that the NHS will deliver the care that they need, efficiently and effectively.
  • A proper medium term strategy for supporting improvements in health service providers and health systems, which is lacking, as also recommended in the More than money report. This should include boosting management skills, particularly change management.
  • Cross party acknowledgement that the NHS has a long-term funding challenge that can’t be filled by efficiency alone if we want a service that continues to improve and is able to respond positively to medical advance. There needs to be a commitment to proper engagement with the public after the election on a non-partisan basis to decide how we want to pay for our health service so that it can continue to meet patient’s expectations for high quality, accessible care; building on the sort of analysis set out in the Barker commission.

Public opinion polls show that the majority of the public continue to support a tax funded NHS, but if we are going to increase tax we have some very important choices to make – about which taxes to raise, who bears the biggest share of any extra tax burden and critically when to increase tax given the slow growth in earnings across the economy.

There are no right or wrong answers to these questions, and all have downsides, but the longer we delay and the more we allow this to be a political football, the worse the outcome.

The reforms to pensions over the last decade show that the public are not daft and understand that these wicked issues need to be addressed. Now is the time to step up to the plate and address the issue of health funding and reform.

Anita Charlesworth is chief economist at the Health Foundation