News analysis: Five years and billions of pounds later, what has changed since Wanless?

Sir Derek Wanless's 2002 report prompted the chancellor to pump billions into the health service - but called for reform too. Now he is back to pack another punch by examining how wisely the money was spent and set out lessons for the future. Daniel Martin reports

He's back. Sir Derek Wanless - the man whose 2002 report gave chancellor Gordon Brown the impetus to pump billions of pounds into healthcare - is to return to check where the money has gone.

As the fifth anniversary of the report approaches, he has been brought in by the King's Fund to find out whether all the money has been spent productively and, if not, to suggest what needs to change.

A lot has happened in the meantime. Much of the sky-high optimism that greeted Wanless 1 has dissipated as it became clear that the massive new investment would not solve all of its problems. The obesity time-bomb is still on the horizon; health inequalities are still stubbornly wide.

And in the past year it has got worse: who would have thought that, almost five years on, hospitals would be cutting jobs and beds for short-term financial reasons?

But when Sir Derek reported to the Treasury back in 2002, he diagnosed the need for real reform as well as the cash injection. His particular demands were for significant improvements in productivity and much higher spending on health prevention.

With health secretary Patricia Hewitt admitting recently that productivity has not improved, and numerous surveys showing that the recent financial problems in the NHS have had a disproportionate impact on public health spending, it seems these could be fertile areas for Sir Derek's new study.

So why has he teamed up with the King's Fund for Wanless 2?

'We said at the time of the 2002 report there should be some sort of review every five years,' Sir Derek says. 'I don't see any sign that that is going to happen so I thought it would be useful if we took a look at the lessons of the last five years and what they might mean for the future.

'A lot of things can change in five years, from the cost of pharmaceuticals to the demographics of the country - and all that can influence spending,' he explains. 'So a regular independent review should be an important part of a national health service.'

Another key aim of the report is to take some of the politicking out of the NHS by laying down fairly and squarely what has - or has not - been achieved.

'So much of what is said is by people who are making political points or are putting forward special interest views. We want to get the facts on the table so that these views can be tested against overall performance.'

The 'Wanless revisited' study will go back to Sir Derek's original report to assess how far the assumptions underlying its conclusions have worked out in practice. And assuming things have not worked out so positively, the study will consider ways to get health service funding back on track.

The original report looked at spending for the next 20 years and envisaged three scenarios designed to capture some significant uncertainties, particularly success or failure in improving efficient use of resources and changing lifestyles.

The 'fully engaged' scenario, in which people take much greater responsibility for their own health, is designed to be sustainable in the long-term. Under this view of the future, obesity would not have so great an impact, and there would be much less binge drinking and smoking - meaning that by 2022 funding would need to rise to around 10.6 per cent of GDP.

The two other scenarios, 'solid progress' and 'slow uptake', indicate lower levels of public engagement in their own health. Under the worst-case 'slow uptake' scenario, funding would need to rise to at least 12.5 per cent of GDP by 2022.

It is a bleak vision; and Sir Derek warns that it could have a dramatic impact on the future of the NHS and how much the public is prepared to pay to fund it.

'If people begin to believe it's a terribly inefficient service, they may begin to question what they are prepared to pay for,' he warns. 'There will be pressure to improve delivery and that could lead to a reduction in services or a change in the method of funding. It could herald the social insurance revolution; who knows?

'It is very important that we get to the fully engaged or solid progress type of area.'

To reach the fully-engaged scenario, Sir Derek said in 2002 that there needed to be more spending on public health and IT, much greater productivity, and a shift in spending from acute to primary care. Money should also be invested in changing behaviour to enable the NHS to be sufficiently flexible and well-equipped to face an uncertain future.

The funding has definitely gone in and is forecast to reach 9.5 per cent of GDP by 2008. But the increases will slow down after that, in line with the Wanless recommendations. If the fully engaged scenario is not met, will there be sufficient funding after 2008 to achieve it? That's what the King's Fund review aims to find out.

First, Sir Derek and his team will look at the outside factors that affect healthcare spending. They will use figures collected by the Pensions Commission to investigate the effect of new evidence of demographic change, and will investigate how far drug costs and medical advances have altered Sir Derek's original assumptions. And of course the cost of pay awards to doctors and nurses - far higher than Sir Derek recommended in 2002 - will have to be factored in.

The report will also assess progress towards improvements in productivity - the cost of the inputs versus the quality and quantity of the outcomes - that Sir Derek called for in 2002. He suggested that productivity would need to improve by 2-2.5 per cent over the decade to ensure costs do not become unmanageable. But even though health secretary Patricia Hewitt has already accepted that productivity has not improved, Sir Derek is unwilling to prejudice the findings of his report.

He is being held back by the continuing lack of statutory definition of productivity in the public sector. 'Some of that is about quality and some if about cost-effectiveness,' he explains. 'We need to have a good look at the evidence.'

That could include Healthcare Commission reports on quality of services and financial management. 'We'll also be looking at mortality changes in the UK relative to
other countries, and see what's happened to the key diseases such as cancer. We want to look at whether we're closing the gap internationally and whether we are on course to close it.'

A fundamental conclusion of the initial review was that more money should be devoted to health promotion, to help turn the NHS from a sickness service into a true health service. In order to reach the fully engaged scenario, this spend should lead to increased public awareness of health issues, to the extent that hospital admissions drop and under-65s visit their GPs once more each year.

Among the elderly, there needs to be a 10 per cent reduction in long-term ill-health by 2022 and a shift towards self-care rather than hospital care. Healthy life expectancy should rise in line with life expectancy and there should be no difference in the use of GP and hospital care between older and younger pensioners by 2012. The new study will look at how likely these improvements are, given the amount that has been spent on health promotion.

Back in April, Sir Derek criticised the amount of money being spent on public health for being inadequate, saying too much cash had been taken up by pay awards. Now he is being more circumspect, not wishing to prejudice his review, but public health charities say cuts have grown as the financial problems facing primary care trusts have hit.

'We'll be looking at how much money is going into public health and how wisely it is being spent,' he confirms. 'And we'll also be examining how information has improved - this is vital for public information in health.'

He says it is true that many of the recommendations in his reports have not been taken forward, but he says he does not necessarily mind. 'If the health service has chosen different ways to do this then we will look at those and see how they have fared,' he says.

Sir Derek says he will look at progress on improving sexual health and reducing rates of binge drinking, smoking and obesity. On smoking at least, he thinks there will be good news.

'It looks like we are doing slightly better than our assumptions for what needed to be achieved by 2010 to meet solid progress,' he says. But he suspects that is little to do with government policy: people have simply been quitting the habit more quickly than he expected, and ahead of next year's smoking ban. 'We are moving in the right direction on that, but definitely not as fast as fully engaged.'

On obesity, however, the news is not so good. Campaigners are warning of the disastrous impact of obesity on future years, with the NHS having to pay for greater numbers of people with diabetes and heart disease. Sir Derek says the country is nowhere near fully engaged in this area. 'Obesity is not even stabilising,' he warns.

'We'll be looking at what implications this will have for the future of the health service, and how our assumptions on future funding levels will need to change.'

King's Fund chief economist Professor John Appleby says the report will assess the impact of trust deficits on progress towards the recommendations of the original Wanless report, as well as whether money diverted to staff pay and IT has been spent wisely.

Professor Appleby says: 'It's not just amounts of money spent but how creatively it has been spent in ways to improve people's health. It's not just about getting a new accountancy system.'

The report will be published in the spring, just in time for the next spending review which will be so crucial for the NHS as it will lay out how much money the service will get after 2008, when the record-breaking funding increases are due to come to an abrupt halt.

Professor Appleby says the 2002 Wanless report raised wild expectations about the future of the NHS. Things have changed.

'There has been a bit of disappointment [since the 2002 report] because it hasn't turned out to be the major change people expected,' he says. 'The public may feel the money has gone in but they've not had the results.'