With recent reports on the need to raise healthcare spending in UK through tax increases, Andy Cowper ponders on the money and numbers game being played out
The past week was dominated by “a money and numbers game”, as the Health Foundation/Institute for Fiscal Studies/NHS Confederation report threw out some numbers.
They might not, however, have been quite what the debate about NHS funding expected – or indeed needed. The press release focused on raising all the extra money through increasing income tax by £2,000 a year by 2033. Surprise, surprise: this number led all the media coverage, and dominated the conversation.
Digging deeper, the report has the numbers we would broadly expect: “UK spending on healthcare will have to rise by an average 3.3 per cent a year over the next 15 years just to maintain NHS provision at current levels, and by at least 4 per cent a year if services are to be improved.
“Social care funding will need to increase by 3.9 per cent a year to meet the needs of an ageing population and an increasing number of younger adults living with disabilities”.
You will have read Alastair McLellan’s typically tightly-reasoned editorial, in which he suggests that the most likely outcome is that the NHS funding boost will be a (single figure) percentage that starts with a number 3 rather than a 4.
There is a clear and present danger that we start playing the money and numbers game with the cart firmly placed before the horse. That would be Not A Good Idea.
So, a non-hog-whimperingly silly approach to discussing the money would be roughly as follows. First, we know from the work of Sally Gainsbury and colleagues at the Nuffield Trust that the NHS is already operationally under water by about £4bn a year. And £4bn for the Exchequer requires a 1 pence raise on the basic rate of income tax.
That money has to be found, to prevent the ongoing combination of national pay restraint, capital-to-revenue transfers, late payments and lying about the financial position, which have been the only things keeping the NHS apparently operationally uprightish over recent years.
The incentivising of financial lying in control totals has not really been a high point of recent health policy.
Pothole Care Fund
The next thing that needs to be addressed is all the potholes. I wrote about these previously.
In this regard, another £4bn would not go particularly far: NHS Estates found that “The total cost to eradicate backlog was £5.5bn, an increase of 11.5 per cent on that reported in 2015-16. This is also known as ‘backlog maintenance’ and is measure of how much would need to be invested to restore a building to a certain state based on a state of assessed risk criteria. It does not include planned maintenance work (rather, it is work that should already have taken place)”.
Then there is the capital drought. Land sales and capital-to-revenue transfers worth £1bn were made by the NHS in 2017-18.
The NHS is going to need some proper access to capital. If we want to provide better care closer to home, it will need some building.
Likewise, if we are going to co-locate nursing care or community hospital-type beds with acute facilities to get patients who are medically well but unfit for discharge out of the acute bloodstream, that will require capital.
Then there are wages, which have been drifting behind inflation for some years for most NHS staff. The NHS crisis is a workforce crisis, as I wrote in one of the first of these columns.
Likewise about the how, why and when of raising wages.
“Massively more tech-ed up”
It seems that health and social care secretary Jeremy Hunt’s techno-enthusiasm has again run riot in this piece for the Telegraph. Mr Hunt has form for tech-enthusiasm, which is delightful if perhaps not always utterly practically focused. It has been an enthusiasm of his for some time.
Mr Hunt is right that the NHS could use technology better (and in parts, does very well). He is surely correct that exciting, new possibilities are coming through (alongside the usual ersatz solutions and fraudulent nonsense from some well known chancers).
But tech does cost money. Training people to use it advantageously and in ways that don’t duplicate extant processes and procedures takes thought, money and time. Getting the NHS more “tech-ed up” would be good, but it will not be a free good.
The non-stupid way to get to the number is to look at the current baked-in underfunding; the untruth incentives; and the potholes and capital and tech requirements.
The smart plans and numbers should fall out of that, rather than delivering a figure per household. Economists learn pretty much with their mother’s milk that a household budget and a national budget are not the same. (Leaving aside the value of debt and the importance of multiplier effects, governments and central banks can and do create money; households trying the same trick get done for fraud.) Intelligent policy conversations need to bear this in mind.
Towards an NHS Provision Board
A wry smile played around the corners of my well-chiselled features when I read the board papers for the joint NHS Commissioning Board/NHS Improvement session this week.
As Oscar Wilde so nearly said, “the only thing worse than quoting oneself is not quoting oneself”: in January 2013, I wrote “most of the delivery of The Nicholson Challenge so far has come about by capital underspending, freezing wages and sacking some managers. None of which had anything to do with commissioning. All of which were centrally driven and provider oriented reforms.
“Ahead lies the political firewalk of provider reconfiguration, about which I wrote here. There is the list of 20 probably financially unviable providers.
“There is not-too-funky-looking FT pipeline, over which the NHS Trust Development Authority looms like a big, loomy top-down sort of thing. Except we don’t do top-down any more. Do we?
“There is the possibility of FT acquisitions and mergers… oh no, hang on, not that easily there isn’t, it seems!
“There is also the need to improve the cooperation and coordination of patient care between primary and secondary care – in a completely non-anti-competitive way, naturally.
“What a bitter irony it would be if the reforms were to fail because of the lack of an NHS Provision Board.”
Five and a half years later, NHS Improvement starts to reinvent itself as the NHS Provision Board.