The looming gap in NHS funding – what is the government’s policy for dealing with it?

Colin Leys | August 19, 2013 | Blog


Colin Leys

Repeated official warnings about the looming ‘black hole’ in the NHS budget without any indication of an overall government policy for dealing with it have become a public policy anomaly, to put it mildly. Would we accept the lack of a systematic policy response to a comparable threat to any other key public service?

The scale of the ‘black hole’  has been exaggerated by repeated  citations of the Nuffield Trust’s December 2012 forecast of a £50bn gap between the money the NHS will need by 2021-22, and the money it will then have. This forecast rested on the explicitly extreme assumption that the NHS would get no increase in its budget between 2012 and then, and that it would have made no improvements in productivity since 2010. If however we factor in the £20bn of ‘efficiency savings’ that are supposed to have been made by 2014, the gap is closer to £30bn. But this is still a massive shortfall. What does the government intend to do about it?

We seemed about to get an indication of this in July when Sir David Nicholson announced that a new publication, ‘The NHS belongs to the people: a call to action’, would invite the public, doctors and politicians to have a debate about ‘opportunities and investment unimaginable when the NHS was created.’  But when the document appeared it only proposed to ‘gather ideas and potential solutions that will inform and enable CCGs to develop 3-5 year commissioning plans’ and to ‘gather ideas and potential solutions to inform and develop national plans, including levers and incentives, for the next 5–10 years.’

So what is NHS England really thinking? It is agreed that closing the gap by continuing increases in NHS productivity of 4% a year after 2014 – would be (in the Nuffield report’s words) ‘unprecedented’ – clearly a euphemism for ‘impossible’. But any increase in NHS funding is also ruled out. The only realistic option, the Nuffield report concluded, was some combination of ‘service reconfiguration; integrated care; workforce skill mix; changes to social care funding; and greater use of telehealth and telecare’ (p 9, ‘a Decade of Austerity’) A third, unstated, alternative is obviously a steady – or perhaps quite rapid – contraction of NHS coverage and decline in quality.

The two crucial areas for action are service reconfiguration and ‘integrated care’ (which is actually part of reconfiguration). The concentration of specialist services for heart attacks and strokes is routinely cited in policy-making circles as a model of what needs to be done. But the scale of centralisation that seems to be intended goes much farther. the likely resistance to it is presumably why it is not openly declared to be government policy. In policy-making circles it seems loosely accepted that Accident and Emergency and most acute care services should be concentrated in a few mega-hospitals, while the care of people with long-term chronic illnesses will be as far as possible outsourced to private providers. In-between there will be local ‘urgent care’ centres for people with injuries and other short-term conditions that are not expected to need hospitalisation. This, it is maintained, will save both money and lives. But without any explicit official plans to study we cannot judge whether either of these aims will actually be served.

Decisions being made on the ground, however, suggest that the policy is being pushed ahead without public debate. In July NHS London explained its thinking on the reconfiguration of hospitals in the capital. Eight of London’s A and E units were to close. In their place ‘minor injury’ and ‘urgent care’ units would be opened, but located ‘away from hospitals to prevent people entering A and E unnecessarily’. Some of the eight targeted A and E departments have already been closed or are scheduled to close, and Lewisham’s would have been until Mr Hunt’s decision to close it was ruled unlawful. So it seems fair to suppose that concentrating A and E and maternity services – and the necessary depth of other supporting services – in a few very large hospitals, and in effect closing many of the rest, is one half of the model that NHS England are pursuing.

The other half is perhaps exemplified by the newly-announced plan to outsource a wide range of services for older people in Peterborough and Cambridgeshire, including mental health and end of life services, at a cost of up to £1.1 bn over seven years. The scale of the contract on offer means that a significant component of the increasing healthcare needs of that area – the needs of its ageing population with their chronic illnesses – will be shifted to a private provider to deal with. Whether this will cut costs, while also improving the quality of care, as its proponents claim, remains to be seen. The past record of Serco and Virgin and similar companies that are said to be in the frame is not encouraging.

If this picture of government policy is speculative it is because we are obliged to deduce it from what is happening on the ground. Theory, experience and common sense suggest that whether or not these changes save money, they will reduce the scope and perhaps also the overall quality of NHS care. But without being able to see the plans and the evidence for them it is impossible to judge.

About the author

Colin Leys

Colin Leys

Colin is an emeritus professor at Queen’s University, Canada, and an honorary professor at Goldsmiths, University of London. Since 2000 he has written extensively on health policy. He is co-author with Stewart Player of Confuse and Conceal: the NHS and Independent Sector Treatment Centres.See all posts by Colin Leys