Cowper’s Cut: The 3pc solution – the politics and practice, the ends and means

So, we have got the number for the NHS funding boost. And as correctly predicted by my boss, it starts with a three.

The headline details state an average 3.4 per cent real terms increase for each of the next five years.

After the interesting way the last spending review outcome for the NHS was announced, some understandable scepticism will remain about the exact levels.

We also do not yet know how these commitments will be funded.

One thing we do know, though, is that the prime minister’s boast (which appears on the 10 Downing Street social media account and website) that some of this will come from a “Brexit bonus” is hog-whimperingly bogus.

The Office for Budget Responsibility, which uses data fresh from the Treasury Munchkins’ own supply, is quite clear on this: Brexit is likely to have a £15.2bn cost to the British economy.

The Institute for Fiscal Studies is equally clear – any talk of a Brexit bonus is nonsense.

I mentioned the Nolan standards on conduct in public life in a recent column (selflessness, integrity, objectivity, accountability, openness, honesty, leadership). Blatantly lying about the source of the money in this way contravenes just about every single one.

The politics of the pressure

To show off my staggering numeracy, the 3-ish per cent is not the 4-ish per cent that everyone serious said was needed to prevent deterioration; nor is it the 5-ish per cent required for modest improvements.

This means that the NHS Oliver Twist –  “please sir, I want some more?”– will keep sweeping the dancefloor or your nearest public policy discotheque for a while, pop kids. Party on, dudes!

However, the politics of this matters. This is a significant achievement for what we must now call the Hunt-Stevens axis.

Delightfully, it is an equivalent blow to the camply butch self-image of the Treasury Munchkins as a financial hard man (“you’ve been a bad, bad, overspending universal tax-funded public service!”).

I have previously observed that, working in tandem, Jeremy Hunt and Simon Stevens walked prime minister Theresa May and then chancellor Philip Hammond up to this point with considerable political skill.

Brexit did play a part – but not the part Mrs May is misleadingly claiming. It worked for the funding boost principally through the NHS England chief executive’s audacious use of the £350m a week bus in his speech to last November’s NHS Providers conference.

Mr Hunt has been privately and in Cabinet fighting the corner for a significant funding increase for some time. Latterly, he has apparently judged that the fraying of collective responsibility by various Cabinet members had left him comfortably able to make the case in public.

It is a mordant irony that while the Lansley reforms have retoxified health policy and legislation for the Tories for a generation (as well as pawnbroking the NHS), they have liberated both Mr Stevens and Mr Hunt to pursue a robustly challenging case for the NHS to get the funding it rather desperately needs.

Air cover

The Treasury Munchkins seem to have provided themselves with air cover for the 3 per cent real terms increase thanks to a secret Cabinet Office review, revealed by my HSJ colleague Shaun Lintern.

It’s slightly surprising that this was even needed given the plethora of expert reviews pointing out that the NHS’ long-run real-terms budget increase has been just over 3.7 per cent a year over the past 70 years.

But as we know in politics, who says a thing matters as much as the thing that is said. And in our post-truth politics, “people in this country have had enough of experts”. Ahem.

May week is in June

Mrs May gets her moment in the NHS funding sun. It may temporarily boost her popularity: it certainly gives her brief respite in the ongoing quest to hold her party and government together over the Sisyphean task of Brexit.

Obviously, this is the beginning of a separate conversation. It is well worth reading the following Twitter threads from Nuffield Trust chief executive Nigel Edwards on the wheezes usual to NHS spending announcements, and from Nuffield Trust senior policy analyst and erstwhile HSJ news editor Sally Gainsbury on the actual state of the deficit.

The real NHS deficit

As I have reiterated in recent columns, the NHS is under water by about £4bn thanks to the system leadership’s encouragement to tell it like it isn’t on the finances.

There are vast loans to keep the lights on to pay the staff (attracting 4 or 6 per cent interest rates) from the Department of Health and Social Care to various NHS organisations, which almost certainly will not be repaid, ever.

There is the capital drought, exacerbated by capital-to-revenue transfers worth £1bn in 2016-17. The maintenance backlog would cost more than £5.5bn to fix.

And there are the workforce gaps, which cannot be solved quickly without more immigration of the kind the Tier Two visa situation prevents (now being fixed).

I understand the following from sources close to the negotiations: the baseline funding for 2018-19 anomalies and the £540m “encouraged” out of the DHSC budget have both been set right. The pensions nasty (which Sally Gainsbury notes in her above-mentioned thread) has also been fixed which, if it had been consolidated in the data, could have made the 3.6 per cent real terms rise in 2019-20 into the 4.3 per cent many had hoped to achieve.

I also understand there are some written deals on how social care will not be further degraded, nor further increase the burden on the NHS.

Practicalities: a time to plan; a plan to time

There is an odd little idiom in German that reads: “Everything has an end, apart from the sausage, which has two.”

Perhaps there is an end for the time being to the politics of NHS funding. What Stevens and Hunt have done is taken the issue out of the territory of annual spending reviews. If you accept the world view that the UK economy is heading into uncertain years given the economic consequences of Brexit and the business cycle, that looks a lot like a good move.

For the next five years look like an insurance policy. In that version of the world, real increases of over 3 per cent are a decent start on the road back to NHS economic reality.

Now what is required is a plan of which potholes will be filled first, and how. A plan that is candid about what is going to be high-priority and what is not so much. This is where the 10-year horizon comes in, allowing solid planning in the early years to become an iterative basis for grown-up conversations in the latter five years.

The Five Year Forward View is, as I said at the time of its publication, a welcome vision but not an operationalisable plan.

Capital and workforce will also be crucial in the plan. In terms of legislation, there will be an interesting reversal of the usual roles as, effectively, Parliament is going to be consulting the NHS on its legislative needs and wants (which could be so framed as to win some cross-party support, Conservative health policy having the excellent brand reputation it does).

Mis-sold the reason for an NHS funding boost?

Mrs May’s first retail line about the funding, that it will in part be a Brexit bonus, need not detain us further, but her other attempted retail line, about giving the NHS a 70th birthday present, can perhaps unite the whole of our fractured and fractious nation, Tory or Labour, Brexiter or Remainer.

Because the NHS isn’t actually 70 until 5 July 2018. And there’s nothing most people like less than a premature congratulation.