The sacred cow

June 14, 2010 2:40 PM


Nhs276 This weekend Tom Clougherty, from the Adam Smith Institute, wrote an interesting piece for the Yorkshire Post. He argued that the NHS budget shouldn't be ring-fenced - indeed, no budget should with a fiscal deficit of more than £150 billion to tackle. There is plenty of waste in the NHS and savings can be made. While spending has increased dramatically over the last decade productivity has decreased - the King's Fund estimate that this productivity gap is valued at £21 billion.

For example the Strategic Health Authorities are an unnecessary and expensive layer of bureaucracy. They implement central government diktat and impinge on the notional independence of Trusts. NHS professionals I have spoken to have said that even Foundation Trusts are not afforded genuine independence, following the SHA's centrally imposed guidelines to the letter.

The article also mentions the cost of staff to the NHS. An 84 percent increase in management since 1999 has certainly added to the bureaucracy and has been expensive. And in the same period there was also a 28 percent increase in other non-medical staff. But there are structural issues with pay, too. Centralised bargaining means that Trusts have very little flexibility in controlling their biggest item of expenditure.

Of course, the current idea of ring-fencing spending in the NHS is to cut out
waste but reallocate savings, not simply carry on with existing spending
plans. But genuine structural reform of the NHS will mean that money can be saved. Decentralisation of pay, financial control and decision-making is key to this.

Given the scale of the crisis with the public finances, it's senseless to ring-fence your second biggest area of spending.


Nhs276 This weekend Tom Clougherty, from the Adam Smith Institute, wrote an interesting piece for the Yorkshire Post. He argued that the NHS budget shouldn't be ring-fenced - indeed, no budget should with a fiscal deficit of more than £150 billion to tackle. There is plenty of waste in the NHS and savings can be made. While spending has increased dramatically over the last decade productivity has decreased - the King's Fund estimate that this productivity gap is valued at £21 billion.

For example the Strategic Health Authorities are an unnecessary and expensive layer of bureaucracy. They implement central government diktat and impinge on the notional independence of Trusts. NHS professionals I have spoken to have said that even Foundation Trusts are not afforded genuine independence, following the SHA's centrally imposed guidelines to the letter.

The article also mentions the cost of staff to the NHS. An 84 percent increase in management since 1999 has certainly added to the bureaucracy and has been expensive. And in the same period there was also a 28 percent increase in other non-medical staff. But there are structural issues with pay, too. Centralised bargaining means that Trusts have very little flexibility in controlling their biggest item of expenditure.

Of course, the current idea of ring-fencing spending in the NHS is to cut out
waste but reallocate savings, not simply carry on with existing spending
plans. But genuine structural reform of the NHS will mean that money can be saved. Decentralisation of pay, financial control and decision-making is key to this.

Given the scale of the crisis with the public finances, it's senseless to ring-fence your second biggest area of spending.

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