The NHS has enough money. It needs to spend it better

October 23, 2014 9:07 AM

“NHS needs extra cash and overhaul” scream the headlines today, with NHS England boss Simon Stevens making the case for an additional £5bn in funding per annum to stave off a funding crisis.

There is no disputing Simon Stevens’ dedication to the NHS. He took a significant pay cut to take the job when he left private provider UnitedHealth, and has since then advocated a sensible approach to funding the NHS. But his call today did rather smack of hoping that ever more money will solve deeper-rooted problems.

Historically speaking, the NHS between 1979 and 1997 saw spending increases averaging 3.2% in real terms. The NHS Budget very nearly doubled between 2000 and 2010, and has been protected from the necessary savings that have been par for the course in other areas. Yet, as the National Audit Office noted in 2010, that didn’t necessarily translate into better hospitals.

“Over the last ten years, there has been significant real growth in the resources going into the NHS, most of it funding higher staff pay and increases in headcount. The evidence shows that productivity in the same period has gone down, particularly in hospitals.”

Why? More money created more middle managers. More money created higher pay . My colleague Alex Wild did a fantastic job last week demonstrating where a lot of that money went. Spoiler: the pockets of executives.

More money certainly didn’t do anything for the patients at Mid Staffs screaming in agony down empty corridors.

This is why today’s announcement, and the NHS arms race we saw during party conference season in which every leader assured more funding and more nurses, is the wrong way to go about delivering a health service that works in ten or twenty years. In today’s Daily Telegraph, Andrew Haldenby, the director of the think tank Reform,makes this argument in a most compelling fashion.

We need to think more critically about the long-term, and about cutting out waste and inefficiency. Our research demonstrated £50 million a year is lost on PR officers and non-jobs; last week, The Times reported on some £5 billion worth of inefficiencies. That’s money that could be on the frontline. That’s before we mention the seemingly endless financial black hole that appears whenever the NHS – or any Government department – attempts to tinker with its IT systems.

Governments are in a tough spot, of course. Reform the NHS, and you’re accused of meddling, opposition politicians ready to barrack you for fiddling with the “envy of the world.” Some of the reforms announced by Stevens today will save money in the long-term and should improve care for patients, but we need to go much – much – further.

And we need a little more honesty about the debate. Last year we spent just over £50 billion on debt interest, half the budget. As Norman Lamb, the Health Minister, said in his speech at Liberal Democrat conference:

“Yet, as our national debt grows year by year as we borrow to keep public services going, so the amount we spend on interest to service that debt grows.

“Every pound we spend on interest on debt means a pound not spent to support someone with dementia, to provide therapy for someone with severe mental ill health or to ensure that a cancer patients gets access to drugs that can keep them alive.”

Never let it be forgotten that Britain’s national debt is the greatest challenge to the NHS, to the police, to the fire service, to local government social care and to every other essential public service. In short, every decision must be made with the intention of bringing the deficit down. And with that in mind, regrettable as it is, it’s impossible to support any calls for more NHS funding.

Expenditure data: HM Treasury

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