On Wednesday 17 April, a multidisciplinary team of healthcare and economics experts will discuss the seminal report The Rational Policy Maker’s Guide to the NHS with members of the Senedd, at an event sponsored by Jenny Rathbone MS. The award-winning Welsh actor Owen Teale (best known for playing Ser Alliser Thorne in Game of Thrones) will perform an excerpt from Nye Bevan’s In Place of Fear, reminding us what fearless, visionary policy-making looks like.
The NHS was a central part of the UK’s post-war social contract when it was founded. Now it’s struggling to perform and there are increasing calls from the right for so-called ‘reform’, which is often a euphemism for privatisation and introduction of insurance-based funding. This guide explains how there can be no healthy economy without a well-funded NHS: if the NHS is allowed to fail, so too will the economy. We hope to influence the Welsh government to prioritise NHS funding.
The assault on the NHS
Its detractors are calling for a fundamental change to the business model of the NHS. We want politicians to commit to restoring the NHS as a public service, free at the point of use, and funded through progressive taxation.
A project supported by the 99% Organisation, the campaigning group Keep Our NHS Public, and others examined the extent, if any, to which detractors’ arguments have merit. It concluded that they’re both factually unfounded and illogical. And, moreover, that the damage they’re doing to the health of the nation and the economy is enormous.
We pulled together a team with expertise ranging from NHS management and senior clinical roles to strategy, economics, and financial analysis. This team produced The Rational Policy-Maker’s Guide to the NHS, which tackles three questions:
1. What works in practice?
2. What has gone wrong in the UK?
3. What kind of system would be sustainable into the distant future?
The team found that it’s the government’s policy of underfunding the NHS which is unsustainable. The reason is simple: the economy is driven by people – specifically, healthy people of working age. There are over 2.8mn working-age adults unable to work due to ill-health (9% of the total), and this is rising fast. It’s that trend which is unsustainable. If the NHS fails, the economy will fail with it.
What works in practice?
Healthcare systems are complex and there are many ways to assess their performance. From the citizens’ point of view, there are three things we can ask of our healthcare system:
- We want it to be effective.
- We also want it to be equitable.
- Since it is publicly funded, we want it to be efficient.
That’s what we can ask of our healthcare system, but it’s not all we care about. If the inputs aren’t there, the outputs will be poor. And context matters enormously. The US has very poor life expectancy compared with other countries, and part of that is certainly down to healthcare. But a big part is gun crime, overdoses, and other ‘external’ causes.
Of the many international benchmarks of healthcare performance, perhaps the most comprehensive are those produced by the Commonwealth Fund. Here’s a summary of its analysis published in 2014, using data from 2011–2013.
The benchmarking shows a clear number one: the pre-underfunded NHS. Best on outputs (quality of care) and efficiency, and excellent on equity; not best on healthy lives because of the context of high levels of poverty and inequality. It also shows a clear number 11: the US system, which is by far the worst in the developed world.
Over a longer time, the picture is similar. The UK has slipped slightly in recent years and is no longer first (though it was as recently as 2017). But overall the UK system has the best track record, because it naturally scores very well on equity. A system that’s free at the point of use and funded from progressive taxation is the best way of delivering equitable healthcare. It also scores extremely well on efficiency – indeed, it has often been the most efficient system.
What went wrong with the NHS?
In summary, looking around the world to see what works in practice gives a clear answer: the pre-underfunded NHS is the best model so far demonstrated in an advanced economy. But it’s clear that the NHS is struggling today.
Why? Underfunding. Since 2010, we’ve been spending less than other advanced countries, spending a declining percentage of GDP on healthcare, and – most importantly – not keeping pace with the needs of the UK population.
There was a noticeable change in funding policy from 2010. Previously, as with other countries, the UK had been spending an increasing percentage of GDP on healthcare. Since 2010 that percentage has gradually been decreasing, and spending in the UK is now below almost all other advanced economies.
The result was inevitable. We now have fewer doctors, nurses, and hospital beds than almost all our peers, and the service levels we experience have dropped dramatically. The NHS is no longer performing as it did – and this is directly attributable to the impact of 14 years of underfunding. No healthcare system in the world can withstand sustained underfunding.
A rational policymaker would have established both that the pre-underfunded NHS was the best model so far demonstrated in an advanced economy, and that its underperformance in recent years is due to underfunding. On that basis alone, they might be tempted to conclude that the best strategy was to recommit to the fundamental business model of the NHS, and fund it properly.
Long-term sustainability
NHS detractors make another unfounded and illogical claim: that, with an ageing population, funding the NHS is no longer affordable. And therefore we have no option but to change to a different model.
The claim is unfounded because, combining Office for Budget Responsibility data on health spending by age and Office for National Statistics population forecasts, we find no such issue. It’s illogical because if the NHS, the most cost-effective system in the developed world, is unaffordable, then any proven system is unaffordable. A change to an alternative model would bring either higher spending or worse health outcomes. Or, like the US system, both.
In fact, it’s the underspending which is unsustainable, since people cannot work if they’re seriously ill. Andy Haldane, former Chief Economist at the Bank of England, recently explained: “For perhaps the first time since the industrial revolution, health factors are acting as a serious headwind to UK economic growth. They’re contributing significantly to a shrinking labour force and stalling productivity.”
OECD long-term growth forecasts show that by 2060 the UK should expect a GDP of £3.8tn, compared to £2.2tn today. Current government health policies would massively undershoot the OECD forecasts – they would be economically ruinous for the UK.
A rational policy, adjusting healthcare spending to meet population needs, would produce a spending profile of this form.
The analysis shows a short-term spike in spending as capacity is rebuilt, rather as we saw take place in the years 1997–2009, followed by a return to steady state spending of around 9% of GDP. And the resulting GDP in the year 2060 would hit the OECD target.
Taking the message to parliaments
In July 2023, our team held a parliamentary briefing in Westminster. In February 2024, it held one in Holyrood. This month sees the briefing to the Senedd.
We want all parties to commit to the NHS:
- Fund the NHS properly.
- Increase spending on prevention.
- Use GDP growth to fund effective poverty reduction.
Taking these actions will save both the NHS and the UK economy. If you can help to achieve this through your support, please let us know.
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