Executive summary
Historical productivity
- Healthcare productivity fell sharply during the pandemic, but had been in decline even before then, starting as early as 2017-18.
- Productivity growth from 1996-97 to 2019-20 averaged 0.89 per cent per year:
- From 1997 to 2010 it was 0.68 per cent
- From 2010 to 2015 it was 2.34 per cent
- From 2015 to 2019 it was 0.28 per cent
International comparisons
- As a percentage of GDP, the UK spends more than average on healthcare than comparable countries in Europe and the Anglosphere, ranking 3rd of 13. However, due to poorer economic performance, this translates into lower per capita spending where the UK ranks 9th of 13.
- For the amount it spends, the UK does not have the level of healthcare resources that would be expected, ranking just 12th of 13 on this metric. This suggests a lack of efficiency in converting spending into resources.
- The UK performs well at converting resources into activity. While the UK is ranked 9th of 13 for healthcare activity, adjusting for the level of resources available boosts its performance to 2nd of 13.
- Publicly run systems like the NHS are subject to political pressures, which affect spending priorities, particularly capital spending where it ranks 11th of 13.
- Compared to other publicly run systems the NHS spends considerably more on personnel and pensions, comprising 64 per cent of total expenditure. Yet it still faces serious staffing shortages.
Recommendations
- The practice of raiding capital budgets to fund day-to-day spending must end, and firm protections must be put in place for capital budgets going forward.
- Priority must be given to capital investment over further expansions in the number of NHS staff.
- Remuneration should be rebalanced away from pensions and towards take home pay to make it more attractive for recruits.
- Pay setting should be decentralised. The national pay review body should be abolished and replaced with regional or local structures to allow for greater flexibility to respond to local labour market conditions.
- There should be a greater role for compulsory and voluntary insurance-based financing as in other countries with publicly run healthcare systems, in order to reduce the degree of political interference in healthcare spending.