NHS needs reform, not just funding

The Centre for Policy Studies (CPS) has claimed that while calls for more NHS funding are necessary, it is imperative to properly examine how that funding is spent.

With the IPPR and Institute of Fiscal Studies having both recently called for higher taxes to fund the NHS, new research from the CPS argues that extra spending has an ‘alarming tendency to go hand in hand with greater waste’, highlighting the correlation between increases in funding and decreases in productivity growth.

The think tank claims that a four per cent settlement would leave spending more than 10 per cent higher than the three per cent by the end of the decade – but the corresponding increase in NHS output would be only five per cent. To help make the most of resources, including any new funding set to be announced as part of the NHS 70th birthday celebration, a cross-party commission would help secure a greater consensus for reform and a better focus on NHS efficiency.

The CPS analysis of ONS data says that a health service output of 73 per cent, calculated by running annual NHS productivity growth over the next 10 years at the same level achieved in the best five years since 1995, would provide an increase in efficiency that is the equivalent of 219,000 more nurses on wards, 5.5 million more cancer treatments and 74,000 hip replacement procedures.

However, the same analysis warns that if extra funding saw declining NHS productivity, matching the five worst years in recent decades, we would see an increase in NHS output of less than 20 per cent. this would be the equivalent of 159,000 fewer nurses, four million fewer cancer treatments and 58,000 fewer hip operations.

Robert Colvile, director of the CPS, said: “More funding, properly spent, is necessary and welcome. But unless this goes hand in hand with structural improvements to how the NHS is run, we risk betraying patients and taxpayers. The Centre for Policy Studies proposed a Royal Commission for the NHS for just this reason – to gain broad consensus for the kind of improvements required to make the NHS fit for the 21st century.

“How this is paid for is also key – taxes are taking up the highest share of our economy since 1981. That economy, which funds all our public services, would be damaged by any further tax rises to pay for this promised funding. Instead we need to focus on how we can boost growth through economic reforms, including on business and taxation, and the CPS will be setting out more on this in the coming months.”