Why is the NHS in crisis?

Image: Birmingham Eastside, CC BY 2.0

It’s January, which means another winter crisis in the NHS. Last week record numbers of patients were forced to wait in the back of ambulances as hospitals in England struggled to cope with demand for treatment. On Tuesday, NHS England told hospitals to postpone non-urgent operations, leading to tens of thousands of cancellations.

The winter crisis has become an annual affair. So why can’t our health service cope?

The NHS is a complex beast, but as usual it helps to follow the money. There are good reasons why spending on health should be expected to increase over time: an ageing population means that demands on health services rise since older individuals on average consume more, and more expensive, healthcare. Demand will also increase over time as a result of the rising prevalence of some chronic conditions, improvements in access to care, and improvements in technology.

In recent decades spending on the NHS has indeed increased: since 1948, spending has risen by 3.7% each year on average (adjusting for inflation). Spending relative to the size of the economy – the most effective way to evaluate trends in health spending – increased from 4.1% of GDP in 1978/9 to 7.6% in 2009/10.

Since 2010, however, this trend has reversed. As the Kings Fund has reported, we are now experiencing an unprecedented sustained decline in NHS spending as a share of GDP.

More than anything else, the reason the NHS is under so much pressure is that the Government has decided to squeeze resources at a time when demands on the service are increasing. According to the King’s Fund, spending on the NHS must rise to at least £153 billion in 2022/23 to keep pace with demographic change and other increasing cost pressures. On current plans, however, the government will only spend £128 billion.

This funding shortfall is not inevitable: it is a political choice. The now common response that “there’s no magic money tree” is a cynical ploy. It is simply a convenient way to mask an ideological crusade to squeeze public services. For a country like the UK, financing government spending is not a problem. The truth is that the Government has simply decided spend money on other things. Like giving tax breaks to large corporations.

According to the Institute for Fiscal Studies, the Government’s corporation tax cuts since 2010 have reduced tax revenues by at least £16.5 billion a year. Then there’s the cuts to inheritance tax and capital gains tax – both of which will primarily benefit the wealthy – which have reduced revenues by another £1.5 billion.

Claims that “health tourists” are to blame for the crisis are also a myth. The Government’s own figures show that this activity amounts to no more than 0.3% the NHS’s budget.

There are undoubtedly cost efficiencies and service improvements that can be made in the NHS. But let’s be clear: the reason the NHS is in crisis yet again is because the Government has decided to spend money on other things it deems more important.

  • Alasdair Macdonald

    Mr Macfarlane, this is OK as far as it goes and is valuable in setting out explicitly that it is political decisions which are largely contributing to the problems experienced by NHS. In that narrow context to point to cost efficiencies as one way forward. However, the question is more complex than that and, while finance will always be a major factor and the political philosophy underpinning these financial decisions worthy of deep consideration, I think we have to look more radically at how the NHS is organised and how it can be made more dynamic and responsive to changing circumstances, such as the fact that more of us are living longer and the fact that obesity and mental stress are increasing problems amongst the population as a whole.

    Undoubtedly, may people within the NHS and in the Civil Service are examining this and have mapped out potential ways forward, but, it is the detachment of the bulk of the population from the consultative and decision-making process that is a problem. A large part of this is our appalling media and too many punch-and-judy type politicians, who focus on trivia such as failures to attain targets AS ENDS IN THEMSELVES, blaming, making generalisations from particulars by focussing on individual bad examples, such as someone spending 16 hours on a trolley (It is terrible, but not typical, and probably can be explained).

    We need to start by looking at what our own responsibilities for maintaining our own health are. We need to look at which parts of the NHS are the most appropriate to seek assistance from, i.e. self-filtering, we need to look at what can be achieved within our local communities, such as the provision of care to facilitate more rapid usage of acute hospital beds. We also need to require employers to assume greater responsibility, beyond mandatory H&S for promoting healthy behaviours in the workplaces.

    I agree with you highlighting the simple fact of spending being a political decision, but the solution is more complex.

  • victor67

    The funding issue is certainly relevant but we must also look at the multi-national drug companies who have a monopoly market in the NHS. Next to staffing medications is the second biggest expense.
    A massive public body is easy prey to the rapacious business model pursued by these companies. It is like a giant defenceless whale floating in shark infested waters ripe for easy pickings.
    Why leave companies whose overriding motive is profit and a return for their shareholders such an important task of developing and producing the current and future medications? There are so many examples of excessive charging from extending patents to falsifying clinical trials for us not to be aware of the current arrangement.
    Why not invest in a national publicly owned drug service where R&D and investment is targeted at human need and the public good rather than on what medication will give investors the best return

    • Alasdair Macdonald

      The multi-national drug companies have certainly located themselves firmly within the NHS. At Ninewells Hospital in Dundee, there is a drug development team, which is undoubtedly world-leading. It is substantially funded and supplied by a consortium of major European pharmaceutical giants. The director of the unit described the quality and purity of the materials with which he and his team were being supplied as of a level he had never before known or, indeed, thought possible. Undoubtedly, drugs were being produced which were far more specific and effective and, of a general benefit. However, the companies in the consortium are seeking to make profits and these profits are coming from the public purse.

      So, I agree that we should move towards a national publicly owned pharmaceutical service.

  • steve jones

    The graph is on trend (actually better than that). There was a huge spike in the Gordon Brown years that had to be worked through. Even after it worked through, the spending (as percent of GDP) is higher now and even higher than it would have been if the (low) trend of Labour or previous Tory govts. had continued.

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