This report analyses the demand and cost pressures facing the NHS in Wales up to 2019/20 and i...
The NHS is never out of the headlines at the best of times, but its appearance seems greater than ever, especially in the midst of a difficult winter. Yet the government in Wales has elected to protect the NHS budget in recent years despite a reduction in the overall funding available for devolved services.
Despite the rising government investment, people are increasingly struggling to get access, leading to calls for even greater funding. Without careful attention, this can look like Oliver Twist asking ’please sir, can I have some more?’
Oliver’s plea came from a position of undernourishment, and despite the protected budget, the ask for the NHS is from a position of underinvestment. Based on current plans, funding will have risen by an average of 0.9% a year in real terms between 2010 and 2019. That’s less than a quarter of the historic growth rate of 4% a year. Our 2016 report, The path to sustainability, estimated that growth of at least 3% would be needed just to keep pace with pressures from rising costs and a growing population, living longer with more complex conditions. The gap must therefore be closed through improved productivity, cost avoidance or acceptance that the quality or range of services provided by the NHS must somehow fall. With a determination from all those working in the NHS to avoid a fall in quality, the focus has been on cost reductions and productivity to fill the gap. Although productivity growth in the NHS across the UK has been particular high in recent years, a large amount of the savings have come from cost avoidance, namely through suppression of wages. But there is only so far this can go.
The UK government has clear mandate to reduce the national budget deficit, so any big increases to the devolved budget are unlikely in the near future. New tax powers will allow the Welsh government to raise some new revenue, but there’s a strong argument that any new money should go to some of the other public services that have received cuts while the NHS budget has been protected.
So the important question is: why should the NHS receive any additional funding?
There are many reasons, of which I’ll set out three here. There are also a few counter arguments, that we’ll explore in more detail in an upcoming symposium with the Morgan Academy.
The first reason is that the NHS is a clear priority for the population of Wales, as it is for the whole UK. Polling repeatedly shows that it is an area for which most people would be happy to pay more tax. It is clearly a service in which people want their taxes invested.
Investing in the NHS is also proving to be a good investment for the economy. Much has been made of the low growth rate in productivity across the economy, leading the OBR to downgrade their estimates for future economic growth. However, while whole economy productivity for the UK only grew by 0.2% a year between 2010 and 2015, productivity for the NHS across the UK grew by a very healthy 1.7% a year. High productivity is essential for economic growth, so a pound spent in the NHS is a pound well spent for the economy.
The third reason is that the NHS in Wales has a plan. The parliamentary review into health and social care in Wales sets out a clear path forward for the NHS, building on the principles of prudent health care already established. There is a clear focus on staff support and wellbeing, as well as the focus on improving quality of care for patients and improving population health. That’s not forgetting the need to continuously drive for improvements in efficiency and reducing waste.
These are only three of the many reasons. At the symposium we will also explore alternative arguments for prioritising other areas of public spending. Path to sustainability made a clear case for the need for further investment in social care, while education and housing both have strong cases.
In the end, the decision is a political one, and the other arguments may win through. But if this is the case, and the NHS does not receive the level of funding it needs to maintain quality, then what it need instead is honesty. We can’t continue pretending the NHS and its staff can carry on doing ever more for less. If the funding isn’t available, we have to be honest and accept that quality will fall. This may be asking people to wait longer to receive care, or decide which services can no longer be provided.
The decision of how much funding to provide the NHS versus other services is undoubtedly a difficult one. But the necessity to be honest about what a funding settlement means is critical for protecting the patients who are in most need, and the staff that we all rely on.
Adam Roberts (@ADRoberts777) is Head of Economics at the Health Foundation.