Savings on a daunting scale

John Appleby uncovers the full extent of the health budget cuts.

By John Appleby Published 14 November 2011

There seems little doubt that spending on the NHS across the UK over the next four years will reduce in real terms. As plans and inflation estimates now stand, the NHS in Scotland and Northern Ireland will find that spending lags behind inflation - leaving real decreases of 2-3 per cent in budgets by 2014/2015. NHS spending in Wales will fall by roughly 8 per cent in real terms. By contrast, the NHS in England looks like it will do rather well. Planned spend between 2010/2011 and 2014/2015 will increase in real terms - by 0.98 per cent.

Ministers in all parts of the UK have put a brave face on these figures - and engaged in not a little selective presentation of the data. It is hard to blame them. These are very difficult financial times and it has been hard to mirror politicians' efforts to reflect the undoubted priority the public places on health spending in any final decisions about expenditure.

But the fallout from the global financial crisis and our seeming inability to reach escape velocity, returning to pre-recession levels of GDP growth, suggest considerable uncertainty about health (and other) spending.

Even a small increase in general (GDP deflator) inflation will be enough to defeat the government's funding promise for the NHS in England. With its budgets more or less frozen in real terms, the biggest source of pressure on the NHS has nothing to do with the government's health reforms and everything to do with a policy decision to get more and better care for the same money. It will be the equivalent of spending an extra £20bn by 2014/2015 - but without the extra money.

One of the tactics to get the NHS to meet this huge productivity challenge is a real reduction in the prices that hospitals can charge for their services and pressure to divert patients into cheaper forms of care. With falling prices and less work, many hospitals are looking to cut costs, but the scale is daunting; improvements in productivity of about 6 per cent each year, for the next four years. Meeting this would be a rare achievement in any sector of the economy, let alone the NHS, where productivity (however crudely measured) has remained flat at best for many years.

Meanwhile, as the government's health reform bill meanders its way through parliament, it is the financial pressure on the ground in the health service that is driving hospital mergers and potentially enormous changes in the ways we provide and run care. And this is just the first year of a four-year funding freeze.

John Appleby is chief economist at the King's Fund and a visiting professor at City University.

Special Offer: Get 12 issues of New Statesman magazine for just £12

Tags: NHS

View the discussion thread.

1 comment

Mon, 2011-11-21 11:38 — C Baker

I've worked in the nhs. We were told by nhs managers to keep old people in incontinence pads for 8 hours, instead of 4. Savings can not be made where clinical results suffer. Has anybody calculated the money squandered in the administration and managerial roles? Perhaps cut out the coffee machines in the offices. The NHS wastes millions and the structure on the wards is not fit for purpose. We may need more nurses, but their job descriptions need assessing. Patients receive excellent treatment from surgeons and much extra money in the nhs, rightly so has gone on using new technolgy and new cures. This all costs money. Yet after care in the wards is atrocious. This is where the nhs lets itself down. Nurses that can't do dressings, or bandages and basically just administer drugs, that a trained pharmacist could dispense.

I've seen diabetic children go without insulin injections, old people left unfed and in soiled sheets, because nurses no longer do the after care. Also, mentally ill patients left without help and those with senile dementia or Alzheimers left without being fed or given water.

The Royal college of Nursing should be ashamed at the slip in nursing standards that has occured. All they care about is wages, pensions and their rights. Patients' rights are seen as a responsibility of MPs. This is true for funding, but actual medical treatment by nurses is lacking.

They don't even draw up, or consult their care plans. They deliver very bad patient care.

Admin staff also contribute to nhs services and are needed, but this has been abused in some instances. The nurses get less perks.

Cuts are not necessarily the answer, but both sides must take responsibility. The NHS is vital, i would always support it. It does amazing things every day and is a fantastic institution. But we must look at improving the services within. Otherwise we will cut in the wrong places, whilst keep funding a system that fails in many areas.

We should bring back the grade D and E nursing structure and not rely on untrained health care assistants. These untrained assistants do the trained grade D nurses old jobs, but are not trained. Scary.

The nurses are merely ward supervisors and provide no nursing care. More specialists hospitals do provide a higher level of post care, such as in burns units or in eye hospitals etc. But the standard of care on more general wards is shocking.

Throwing money at something doesn't make it better. Cutting in the wrong places too, may cause more costs later.

The nhs has been using privately run contracts for years. This is nothing new. Management training programmes,which fund private consultancy firms. Outsourced catering of a very low standard.

Let's not also forget how the private healthcare sector relies on the nhs for machines, facilities and staff. Most private operations are done inside the nhs. So this is not necesary a public versus private issue. If the nhs fails, then many private services will not be available. It is the nhs that has all the latest technology.