Strong supply response in next two years and on to
2010.
ICT development costs
over next five to
seven years
Care integration and
better management
of chronic illness
planning, whereas the new GP contract will create a great deal of scope
for local enterprise. Its results will depend on local negotiation rather
than a central plan. The inspiration for the contract in fact came from
local initiatives in improving services for coronary health disease in Kent
and other areas which owed little to national policy. In return for acceptance of quality standards GPs have in fact regained some the freedoms
which they had under fund-holding.
The NHS will be under great financial pressure and it will also be
dealing with a much more unpredictable series of financial problems as
new programmes develop. Managers will be dealing with the local
impacts of strongly inconsistent policies and commitments. Hospitals
with higher costs in staffing and capital will be seeking to increase activity. Treatment Centres will be seeking to expand contracts and activities.
PCTs will be seeking to fund extended services in primary and more integrated care outside hospitals.
The most immediate financial problems are likely to arise with hospitals themselves. There is a high risk that spending to purchase more activity from the hospitals will crowd out investment in care integration.
Conclusions
In official doctrine The NHS Plan was presented as an assured long-term
macro success, which will be reached through temporary friction in
problems over waiting times, access and quality. Such problems are
usually attributed to past under-funding. Friction was created by the
timing of the NHS change itself. Reform denotes incentives aimed at
increasing value from existing spending; funding is about additions to
the resources available. Reform seeks to increase productivity from the
existing core while funding makes marginal changes to staffing and
capacity. Since 2000 funding and reform have often been presented since
as being simultaneous and complementary, but in reality funding has
come before reform.
By 2010, total expenditure will be 10.5–11.0% of GDP, which will be
well above the European average and more than 50% higher than the
GDP shares of Scandinavia and New Zealand. On a worldwide basis the
public sector share of spending is likely to be the highest of any system.
The NHS will be facing serious affordability problems from commitments on PFI schemes, staffing, the GMS contract and Treatment
Centres. There will be tension between these commitments and funding
for innovations and new therapies. It will be difficult to fund both the
unfinished agenda set by NICE and National Service Frameworks and the
new therapies that will be emerging in the future.
The failure to use reform earlier means that waiting time targets will be
reached much later and at much greater cost. The reform experience in
the UK and other systems would indicate that the six-month waiting time
target could have been reached in 2004 instead of 2005 and the threemonth target in 2006 instead of 2008 – earlier results which would have
benefited thousands of patients.
The 2005 waiting time target has only become even remotely attainable
because of new programmes introduced when it was clearly not going to
be achieved. Independent Sector Treatment Centres, introduced from
2003 onwards, were not even mentioned in The NHS Plan in 2000. If
these new programmes had been combined far earlier with incentives for
the core health service, the waiting list targets would have been much
more easily and quickly achievable. As it is, it will be almost the end of the
whole decade of The NHS Plan before the NHS begins to approach
minimum international standards in waiting time and access.
Experience both internationally and in the UK shows that reform,
based on changing incentives, can improve access significantly. Waiting
times in Spain and Denmark have fallen sharply since new financial
incentives were introduced. In the UK, reforms such as financial penalties for prolonged hospital admissions and patient choice have been
successful.
There has been a tendency to attribute success to funding where it
should have been attributed to reform, particularly in regard to cancer
services, coronary heart disease and accident and emergency services.
The funding-first decision has perverse effects for the UK as a whole.
Public funding is now rising twice as fast as private. There is a high risk
that the cost increases will crowd out the spending which would be
required for new and unpredictable changes in therapies and technology.
The NHS may be stuck with long-term spending on yesterday’s systems.
There is also the risk that the high rate of increase in spending will not
be sustainable if the growth of GDP falls to 2% a year or if other priorities
emerge. The increase in health spending has been funded in part by a
reduction in the growth of social security spending and an actual reduction in defence spending. There is much that is positive about the aim of
a patient-centred service with more focus on long-term illness. There is
much to admire about the commitment and dedication of staff in the
NHS. In terms of the UK’s longer-term social and economic challenges,
however, the level of spending projected for 2010 represents poor value
for money. With reform followed by some additional funding the UK
could have a major improvement in access and effectiveness for 8–9% of
GDP. That would be 2% of GDP – around £20 billion in today’s prices –
less than under current plans.
In the period 2001–5 the Blair government set a new direction for the
health service involving patient choice, more rapid access, new incentives
and more pluralism in providers. In many ways this was a highly promising agenda for change which fitted to the long-term challenges of
working with a different age structure and higher expectations in a
different kind of society; but this programme was introduced alongside
the previous commitments to massive increases in funding, staffing and
the building of new hospitals. The new reform plan aimed at flexibility,
but this would take investment in new services. The investment margin
was taken over by the cost increases already in the system. The Blair era
threatened to create a future in which the NHS was locked into long-term
contracts for obsolete hospitals and unaffordable increases in staffing.
Among the most pressing problems were those of the likely discrepancy between numbers graduating from medical schools and the number
of funded posts. By 2012, 6,000 people a year will be graduating from
medical school but only 2,000 doctors will be retiring.
The Blair era also left a legacy of serious problems in quality of care.
The NHS, in common with other health systems worldwide, was affec
ted
by the challenge of providing care for patients who were often much
sicker and were being treated by more complex and demanding procedures. The rise in hospital-acquired infection was only one sign of the
problems. There were also large numbers of patients at risk from thrombosis, which was estimated by the Department of Health to cause 25,000
deaths a year in hospitals. There were also many complaints about
medical errors and about the quality of care for elderly patients admitted
with a medical emergency. It was far from clear how the NHS would
develop the confident caring skills to deliver any guarantee of care for
patients. Survey evidence may have created a false sense of optimism as it
did not cover patients who had died and many who had experienced
serious complications. The mid-period reforms set the right way forward
in minimising in-patient admissions and giving people, especially elderly
patients, more support in their own homes, but the drives from the cost
momentum and the payment-by-results system were to treat more and
more patients in hospitals. Thus incentives were increasing hospital
workloads even when hospitals were having great difficulty in delivering
safe care.
For the NHS The Blair era represented an attractive aspiration for a
service based on patient choice. It was developed with great power and
eloquence but on closer examination the concepts were being realised
only partially or not at all. The Blair legacy scored well on intentions but
the likely legacy of results for successors was likely to be most troublesome. There was also a missing economic sense with little concern about
value for money. The extreme case of input fixation was in Blair’s pronouncements on staffing where increases in staffing numbers were held
to be achievements in themselves, irrespective of whether they contributed very much to productivity or whether they created balanced
teams.
There were real achievements in terms of improved access for care.
Waiting times for cardiac surgery fell from two years to three months, and
waiting for elective treatments was a maximum of six months by 2007,
and was likely to be eighteen weeks in many areas by 2008. There were
also some attractive new projects for walk-in centres in primary care. Yet
many of these gains were due to reform – the introduction of competition
and choice – and had come well before the funding increases. The Blair
premiership saw gains in service access for some groups of patients but
the question is whether these could have been achieved at much lower
cost and a greater strengthening of the capacity of local management to
deliver change.
The Blair era scored most highly on its eloquent definition of new ways
forward and placing these new policies against wider themes of social
change. It scored perhaps inevitably low for interest span, as no prime
minister can in the face of national and international challenges take any
consistent interest in any one departmental programme. Blairism was
also associated with a certain amount of wishful thinking and, for health,
an unwillingness to face up to unpleasant realities. For example, a more
realistic approach might have scaled back on the cost commitments in
The NHS Plan in order to allow more investment for the reform programme. The ability to communicate was great and while in place was
used to great effect, but the ability to sustain change and regulation
against a background of strong opposition was only fitfully there.
The Blair era left the NHS in a state of tension between The NHS Plan
momentum and later reform policies. Most of the extra capacity and the
new incentive structures were in place with the potential to generate
some considerable improvements. The money was no longer with government but had been transferred to the Primary Care Trusts. Practicebased commissioning aimed to restore local initiative to GPs. There were
major problems in dealing with the cost increases in the hospital system.
The task for Blair’s successors was to move to a system with much
stronger local capability for securing value from the vast funds now going
into the NHS.
19
Equality and social justice
Thatcher’s legacy, Blair’s response
The society Labour inherited when it took power in 1997 looked dramatically
different from the one it had left behind in 1979. During the Thatcher years
economic growth had disproportionately benefited the better-off, leading to
a widening gulf between rich and poor. The scale of the change can be seen in
historical context in figure 19.1. Poverty more than doubled between 1979
and 1991, with families with children most deeply affected: between one in
three and one in four children lived in relative poverty in 1997. Inequality
measures such as the Gini coefficient show a similar pattern.
Some of these changes could be put down to global forces, including a
growing premium for skilled workers as technological progress shifted
the pattern of labour demand. Demographic change was important too,
with increasing numbers of children growing up in one-parent households. But policy under Margaret Thatcher was also crucial. Curbs on
trade union power and an end to the minimum wages councils had
removed a floor on wages, while the move to linking benefits to price
levels rather than incomes had left those without work, from pensioners
to the unemployed, increasingly far behind. At the same time, changes to
tax policy had shifted the burden of taxation from the rich to the poor, for
example through reductions in the top rate of income tax accompanied
by a greater reliance on indirect taxes. By the early 1990s the UK had
moved from being one of the more equal European countries to one of
the most unequal, more comparable on poverty and inequality measures
to the United States than to Europe. The wider consequences of this shift
were reflected in a number of other indicators: teenage pregnancy and
homelessness were among the highest in Europe and there were high
social-class differentials in infant mortality and other health indicators.1
11 See e.g. Commission on Social Justice/IPPR, Social Justice: Strategies for National Renewal
(London: Vintage, 1994); John Micklewright and Kitty Stewart, The Welfare of Europe’s
Children: Are EU Member States Converging? (Bristol: Policy Press, 2000).
25
20
Single
15
Single with children
Couples no children
Couples with children
10
Single pensioners
Pensioner couple
% of total population
5
0
61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97
Figure 19.1. Population with below half average income by household type 1961–97
Source: John Hills, Inequality and the State (Oxford: Oxford University Press, 2004),
figure 3.1; updated fro
m Alissa Goodman, and Steve Webb, For Richer, For Poorer: The
Changing Distribution of Income in the United Kingdom 1961–1991 (London: Institute
for Fiscal Studies, 1994).
Note: Share of population living below 50% equivalised mean income, before the
deduction of housing costs. Other figures and tables in the chapter use the slightly
different poverty line of 0% equivalised median income, but this is not available for
the long-run series.
What was the response of the Labour Party under Tony Blair to these
enormous challenges in areas close to its traditional values and priorities?
Three phases can arguably be identified. In opposition in the mid-1990s,
the party had gone out of its way to avoid association with the poor and
disadvantaged and to ditch its reputation as the party of tax-and-spend.
Hard hit by successive election defeats, the shift towards the centre
ground had begun under Neil Kinnock and John Smith, but accelerated
under Blair’s leadership. When Blair took over in 1994 he made it clear
straight away that he intended the party to ‘build a new coalition of
support, based on a broad national appeal that transcends traditional
electoral divisions’.2 Between 1994 and 1997 Labour worked hard to distance itself from the unions, steered clear of being drawn into pledges on
spending and abandoned any commitment to full employment. The runup to the 1997 election saw hardly a whisper of poverty, inequality or
12 Tony Blair, Socialism, Fabian Pamphlet 565 (London: Fabian Society, 1994), p. 7.
social justice, although the 1997 election manifesto did emphasise the
importance of addressing educational disadvantage – in 1996 Blair had
famously listed ‘education, education, education’ as his top three priorities for government. The manifesto also promised to introduce a national
minimum wage and to get 250,000 under-twenty-fives off benefit and
into work. But to make it quite clear that this was a ‘New’ Labour Party,
which could be trusted with the nation’s finances, in January 1997
Gordon Brown guaranteed that the party would stick to very tight
Conservative spending plans for the first two years of a Labour government, and pledged not to raise either the basic or top rates of income tax.
From the time Labour took office, however, social justice issues
climbed quickly up the agenda. Blair’s first major speech as Prime
BLAIR’S BRITAIN, 1997–2007 Page 65