Prime Minister Boris Johnson has just promised-in early August 2019- a cash injection of £1.8 billion to NHS England to upgrade infrastructure and equipment in twenty English hospitals. This consists of £1 billion that has been released from surplus reserves by the Treasury and £850 million in new capital funding. Already, experts are claiming this amount is far too little for the purpose. This is an all-too- familiar story as far as the NHS is concerned.
The NHS is a cherished British institution that strives to provide free and universal healthcare at the point of delivery. It has served as a playground, since its inception, for political parties attempting to present credible domestic agendas to the electorate. In the process, it has undergone many ineffective and short-lived attempts at reorganisation and restructuring..
When it comes to discussing NHS funding, the numbers involved are so large that they are beyond the grasp of the majority of the general public-after all, who really knows what can be done with a billion pounds? At a local level, healthcare providers remain largely unaware of the costs of their own activity. Much discourse and debate is thus uninformed and meaningless, being solely guided by emotions and mistaken perceptions.
The NHS is a public monopoly, the world’s largest publicly funded health provider and the biggest employer in Western Europe. The scope of the NHS is ambitious, as it is the national provider of comprehensive preventive and curative health care. The costs of providing this care have unsurprisingly risen year-on-year. The NHS England budget for 2018/19 was £114.6 billion, while total healthcare spending in England in the same period was £129 billion. NHS England allocates these funds through Clinical Commissioning Groups, which plan and commission local health care services from NHS trusts and foundation trusts and community health providers.
Following the formation of the NHS in 1948, difficulties with the public funding of comprehensive healthcare were soon recognised. The NHS budget in its first year was £437 million, but even this amount was insufficient at the time. Charges for dentures and spectacles were introduced as early as 1951, followed by prescription charges in 1952. Dental care, opticians’ services and long-term nursing care are no longer funded by the NHS, with some exceptions.
The NHS is mainly (98.8%) funded through general taxation and National Insurance contributions, with the remainder (1.2%) coming from patient charges, parking charges and the sale of land. This funding comes at the expense of spending on other areas of public expenditure, such as defence, housing and transport, and is determined by the government’s annual Spending Reviews. This is because there is no hypothecated or dedicated tax meant solely for funding healthcare.
Demand for services continues to rise as people live longer, newer and more expensive investigations and treatments are introduced, and there is a growing need for mental health services.
Demand consistently exceeds supply in the NHS. Supply comprises manpower, equipment and drugs. Procurement costs for drugs and equipment vary considerably between trusts. Capital spending on infrastructure, equipment and technology, including IT, does not match up to needs. NHS estates-land and buildings-have been neglected. The NHS maintenance backlog in 2017/18 stood at £6 billion, a figure that is believed to be an underestimate. Much spending on infrastructure has been via the PFI (Private Finance Initiative) scheme. PFI has locked the government into expensive repayment schemes to private firms, comprising capital costs, interest payments and maintenance services.
The largest single item of expenditure in the NHS is on manpower. Pressures on staffing budgets arise from overtime pay, agency costs, pensions, and education and training costs. Manpower costs include people not directly involved in healthcare, such as managers and backroom administrative staff, alongside domestic, kitchen and security staff. Rising wages and other costs have contributed to health inflation.
It is not surprising that many NHS Trusts and Clinical Commissioning Groups are not meeting their financial targets and are overspent on their annual budgets. This funding gap continues to rise year on year.
The biggest concern is, however, that there are significant variations in quality of care, efficiency of care provision, and outcomes across the country, the so-called postcode lottery. Poor care led to the NHS paying out £2.4 billion in 2018/19 for clinical negligence claims, further diverting resources away from direct patient care.
The demand-supply mismatch is highlighted by long waiting lists and the imperative to ration care. For some individuals, the NHS feels much like the Emperor’s New Clothes-it is there, but not for you.
It is clear that the current model of funding and working in the NHS is is need of a major rethink, yet there is no one bold enough to take it on. This incredibly complex monolith needs to be reconfigured-what it stands for, how it is funded, and how spending is monitored. Given the importance of the NHS, cross-party working is probably necessary to avoid inappropriate politicisation of this process. After all, the Second World War was won by a coalition government and collaborative thinking would be a step forward.
Ashis Banerjee (ex-NHS)