Gordons great ball of confusion

6 Dec 01
Chancellor Gordon Brown's scenario for revitalised health spending including an instant £1bn boost was designed to bring certainty and clarity to the argument over funding.

07 December 2001

But if the theme for last week's pre-Budget report was intended to be a 'Ray of Light', it ended up more like a 'Ball of Confusion'.

Confusion as the prime minister reiterated his support for raising NHS spending to the European average by 2005, only to be forced under pressure to moderate that pledge amid arguments over whether it would mean £10bn or £6bn a year in extra taxes.

Confusion as the chancellor said that the groundbreaking Wanless report – by former NatWest Bank chief executive Derek Wanless – into future NHS spending had concluded the health service should remain tax-funded, only for the report's author to claim he had said nothing of the sort.

And more confusion as a number of meetings between the department and finance directors, called on November 29 and 30 to explain next year's spending priorities, were postponed.

Where was Health Secretary Alan Milburn in all this? Trailing behind the big two, it seemed. What is not in doubt is that a turf war is under way between the chancellor and Milburn. Brown is alarmed that the NHS has shown no appreciable improvement, despite the billions of pounds he has pumped into it. He wants the Treasury to have greater control over how the money is spent.

Milburn, firmly espousing the doctrine of devolving spending power to the front line, believes improvements will only become noticeable to the Treasury – and voters – in a few years when new hospitals, better IT and, crucially, more doctors and nurses turn the tide.

But all agree that extra funding is conditional on further reform – or at least goes hand in hand with it. Milburn's initial move in this direction was the announcement on December 4 that the Bupa-owned Redwood Hospital in Surrey would be annexed to the NHS cause as an 'express surgery centre', performing 5,000 routine operations such as hip and knee replacements each year. The deal presages still greater use of private sector capacity to clear the patient backlog.

The health secretary was due to announce next year's health authority allocations on November 28, but this was postponed until December 6. His department said it had not known about the extra cash in advance and officials would need time to recalculate the allocations.

But one source close to the department said this was unlikely: the delay was due to the politicians seeking a 'big idea' on which to spend the chancellor's £1bn.

One candidate was the extension of patient choice. The prime minister had a meeting with the New Health Network think-tank on the morning of the pre-Budget report, where the concept of allowing patients to choose where, when and by whom they are treated was discussed.

Nigel Edwards, NHS Confederation acting chief executive, believed the extra money would be tied to waiting lists. But he added: 'We need to do more than just pouring in money. We must get primary care trusts involved in managing waiting lists and how the money is spent in detail, rather than just having another waiting list initiative.'

In the health service there was frustration as managers waited to hear how much they have to spend next year.

One finance director, who asked not to be named, said: 'The questions that must be answered are "how much of this extra money is going to be targeted against political programmes, how relevant will these be to local health services and how much of this money has effectively already been committed in the form of higher costs when the new contracts for GPs and consultants are introduced?".'

Others believe the money should be channelled into paying debts before PCTs take on many of health authorities' duties next year.

'Locally, the assumption is that the money will be used to wipe out deficits because you can't have newly established PCTs facing deficits,' said Mark Millar, chair of the Healthcare Financial Management Association.

The NHS Confederation was concerned that a review of NHS management by former CBI director general Adair Turner would lead to further, unnecessary upheaval. It was alarmed by the increasing politicisation of the health service and wanted less interference from Whitehall.

Edwards said: 'We hope this will not be another review of structures. There are much more fundamental issues than structures – we want to see a change in the relationship between the centre and the local.'

The Treasury said the Turner review would seek to improve management practices and incentives.

The Wanless report will bring more funding into the service over the long term. Wanless said health spending as a proportion of GDP was consistently lower in the UK than in any comparable country for the past 30 years.

The cost of bringing Britain up to average European Union levels – Wanless says £267bn – was enough to make most of its proponents, including the prime minister, blanch.

How the extra cash will be raised will be the subject of a long and probably bitter debate. The chancellor wishes to forge a consensus around tax-based funding, but the Conservatives are keen on compulsory insurance.

Wanless insisted he has not ruled out any form of funding. 'I have not sought to bury anything for good. It would be quite presumptuous and premature to do that,' he said.

But if taxpayers are paying more for their health care, whether through higher National Insurance contributions or a social insurance fund, their expectations will rise.

'I am concerned, because it looks as though we are entering a vicious circle where we promise before we can deliver,' Edwards said.

It takes time to make changes in an organisation as large as the NHS. But will taxpayers be willing to give the service the time it needs?


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