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15 November 2014

The Health of the National Health Service

Tag(s): Politics & Economics, History
This is the 40th blog I have posted which will be tagged ‘Politics and Economics’. When I write about politics I try to avoid straying into the party political arena though I may not always succeed. I have more usually focused on the institutions as in my blogs on The House of Lords[i], The Speaker[ii] and The European Parliament[iii]. As we approach what may be the most important General Election in a generation I intend to write a monthly blog on some of the most important issues which influence the way people vote. As support for political parties fragments any number of possible outcomes can be envisaged. I will start this series by seeking to tackle the minefield of the National Health Service (NHS).

Former Chancellor of the Exchequer Nigel Lawson famously described the NHS as “the closest thing we have to a national religion.” In his opening ceremony to the London Olympic Games Danny Boyle featured an army of nurses pushing beds around. What foreigners made of it I have no idea. But to the British it is an institution of which they are inordinately proud. By some standards this is no doubt justified. It is the largest public service health organisation in the world. It was created out of the ideal that good healthcare should be available to all, regardless of wealth. When it was launched by the then minister of health, Aneurin Bevan, on July 5 1948, it was based on three core principles:
  • That it meet the needs of everyone
  • That it be free at the point of delivery
  • That it be based on clinical need, not ability to pay
As ‘the national religion’ it has become something about which honest public debate is no longer possible. All politicians insist they will defend the NHS to their dying day. At the same time all politicians know that something that is free at the point of delivery is not affordable as the law of supply and demand has been broken. The demand is infinite and grows inexorably. The supply must be limited by definition. So from time to time supply has been rationed in some way. Waiting lists form. Expensive drugs are rationed. But the media pick up such stories, publish them as scandals, and again dishonest debate breaks out.

To understand this phenomenon a little better it is worth reviewing some of the history. Before the NHS came into being under the post-war Attlee government patients were generally required to pay for their health care. Free treatment was sometimes available from Voluntary Hospitals while some local authorities operated hospitals for local ratepayers. The Local Government Act 1929 allowed local authorities to provide medical treatment for everyone. By 1939 the London County Council was running the largest health service in Britain.

Systems of health insurance usually consisted of private schemes such as Friendly Societies. I know that this is how my parents paid for healthcare and they were by no means well off. Under the National Insurance Act 1911, introduced by David Lloyd George, a small amount was deducted from weekly wages, to which were added contributions from the employer and the government. In return for the record of contributions, the workman was entitled to medical care (as well as retirement and unemployment benefits) though not necessarily to the drugs prescribed. But this scheme only covered the workman himself, not his wife and children.

After the First World War Lloyd George, now Prime Minister, commissioned various reports on the provision of heath care but his government fell in 1924 and no further action was taken. By 1932 the establishment of a State Medical Service was official Labour Party policy. This gradually became a general consensus, at least that health insurance should be extended to dependents, and a British Medical Association (BMA) pamphlet was issued along these lines in 1938.

During the war voluntary hospitals were effectively nationalised to ensure care for those injured by enemy action and the fear that once peace was restored these hospitals would be in financial difficulties drove the impetus for reform. In 1941 the Deputy Permanent Secretary at the Ministry of Health recorded agreement on post-war policy which “included a complete health service to be available to every member of the community.” In other words, as this was a time of coalition, it was not a matter of disagreement among the parties.

The 1942 Beveridge Report on Social Insurance and Allied Services identified five “Giant Evils” in society: squalor, ignorance, want, idleness, and disease, and went on to propose widespread reform to the system of social welfare to address these. Among its proposals was a National Health Service. Beveridge himself was a Liberal, but the report was highly popular and gained widespread support. However, there was not unity on how it should be done. The BMA, the doctors’ trade union, opposed local authority control of hospitals and favoured extension of health insurance. But a white paper was published in 1944 endorsed by the Cabinet, then headed by Winston Churchill. This included the founding principles of the NHS: it was to be funded out of general taxation and not through national insurance, and services would be provided by the same doctors and the same hospitals, free at the point of use and to everyone, even people temporarily resident or visiting the country.

While both the Liberal and Conservative parties quickly adopted Beveridge’s proposals the Labour party was slow to follow. Its leaders opposed Beveridge’s idea of a NHS run through local health centres and regional hospital administrations, preferring a state run body.  As Minister of Health Aneurin Bevan quickly came to the decision that the proposal for local authority of voluntary hospitals was not workable, as the local authorities were too poor and too small to manage them. The National Health Service Act 1946 established an entirely new hospital service. The BMA voted not to join the new service. Bevan, in his famous phrase, “stuffed their mouths with gold” and brought them round in time for the launch of the NHS in 1948. In other words, right from the start he accepted that a large part of the NHS would be provided by the private sector. In fact the NHS is supplied by all three sectors as the charitable voluntary hospitals continued.

By the end of Attlee’s time in office the NHS was already in financial difficulties costing far more than had been expected. The Conservative government introduced a one-shilling prescription charge and a £1 dental charge in 1952. There have been numerous reorganisations and changes since leading to the complex and enormous structure of today. The Blair government, whilst leaving services free at point of use, encouraged outsourcing of medical services and support to the private sector[iv]. Under the Private Finance Initiative (PFI), concocted by Gordon Brown, many hospitals have been built or rebuilt by private sector consortia leaving Trusts groaning with debt thus adding to the unaffordability of the whole project. The first PFI hospitals contained 28% fewer beds than the ones they replaced.

With Labour struggling in the polls, handicapped by an inept leader, it has put the NHS firmly at the front of its election strategy. It has created this myth that the NHS was its invention which my brief history shows to be misleading. What Labour did invent was the centralisation of a service which thus made it too big to manage. It has created a new myth that the Tories intend to privatise the NHS when it did more to do that under Blair and Brown than any Conservative government has done.

The NHS boss has stated that after 5 years of constrained spending a funding gap of £30 billion has opened up. Labour shows no sign of saying how this will be met. I’m not sure any of the others has much clue either. Andy Burnham, shadow health spokesman, also has a grand plan to merge the NHS with social care. Social care, now run by local authorities, may also need reform, but a merger would create an even greater monster and be even more unmanageable. Many people judge the NHS by their own direct experience or that of someone close to them. That is natural but leads to a problem at the macro level. Even if the majority have a good experience the very high level of bad experiences shows there is a need for reform.

The funding gap can only be closed by privatisation to eliminate waste and by introducing some more charges in the system. Most systems in Europe are more mixed economy than the British one and deliver better outcomes. Large numbers of people go to their doctor to complain of an itchy scalp. Even more call the Accident and Emergency services when they can’t get an appointment to see their GP. This would stop if a nominal charge was introduced.

In the 1960s the NHS consumed 3% of GDP. Today it is over 8%. As people live longer, as new drugs and treatments are found, as new surgical procedures are pioneered, at the current rate of expansion we can expect the unreformed NHS to take 20% of GDP and more than 50% of government spending by 2060. That would mean that other public services would have to be cut back enormously and without reform it is unlikely that some of the worst aspects of the NHS would have been addressed.[v]

Those worst aspects include poor cancer survival rates compared to other developed nations; a series of scandals in hospitals; a culture that deals harshly with whistle blowers; diseases that are caught in hospitals, not treated; a failing standard of care in hospitals that means some nurses no longer think their job is to nurse; and an excessive reliance on antibiotics to the point where some doctors fear they may be losing their efficacy.

But the biggest scandal is that you will not hear an honest debate about this issue in the months running up to the General Election.


[i] The House of Lords 7 July 2012
[ii] The Speaker 25 May 2013
[iii] The European Project 12 May 2013
[iv] A former Mars colleague, Allan Leighton went on to sort out Asda and then to sort out Royal Mail. Whenever he saw the Prime Minister he would say “Give me the NHS, Tony. I’ll sort it out.” But I’m not sure that it just needs a strong manager. It needs breaking up into smaller pieces, and/or it needs more competition.
[v] The Economist ‘Andy Burnham’s Big Battle’ November 8th 2014

Copyright David C Pearson 2014 All rights reserved



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