One of the hottest issues in the election campaign is NHS funding. A recently retired senior manager declared that the NHS is under-funded and in the next parliament the NHS would need an increase in spending in real terms of £8.5 billion (£8.5bn). National newspapers are warning of a black hole within the NHS of ten of billions of pounds.
The Labour party and many people who work in the NHS claim that during the last coalition government there have been cuts in the NHS funding in real terms. What does that mean?
Last Labour Government
During the previous Labour term from 2005 to 2010 there was a total inflation of 17.5%. At the start the NHS funding was £82.9bn and at the end £116.9bn. This represents a 41% increase in NHS spending and amounting to £19.5bn additional spending.
The government didn’t actually have that money available and borrowed it from various European and World banks as part of an increased deficit. From the point of view of the NHS it was awash with money, allowing managers to build bigger empires and increase administrative salaries.
Recent Coalition Government
Since 2010 the economy has grown steadily and funding on the NHS has been kept at around 7.8% of Gross Domestic Product (GDP).
The actual figures of funding from 2009/10 to 2014/15 have risen from £116.9bn to£132.7bn. This corresponds to a 13.5% increase in monetary terms. Now over the same period the inflation rate has been 12% so £116.9bn in 2010 should be £130.9bn just to maintain spending.
Actually then there has been a monetary increase in spending of £1.8bn, corresponding to £1.6bn in real terms relative to 2010. There has been no government cut in NHS funding during the coalition government term. The effect though is that the funding flow has been reduced to a dribble.
There has also been a constant drain on money for Private Funding Initiative (PFI) contracts set up by Labour. Also as is regularly published in various newspapers it is the NHS fat cats creaming salaries as high as £400,000 a year plus redundancy pay-offs then being re-employed within weeks.
That’s where the money has gone! It’s not the fault of the bankers, nor non-domicile people living in multi-million pound houses in London. It’s the back room managers with their noses in the trough. Instead of just one executive on £150,000 you could employ 6 nurses on £25,000, and instead of a senior manager on £400,000 you could employ 16 nurses.
Within the NHS the clinical staff will have experienced severe restraints on staff and hours. The administrators have been running the hospitals at minimum or just below minimum staffing levels and using agency nurses and locum doctors to cover regularly occurring shortages.
In addition, due to Labours’ disastrous pay and conditions agreement with GPs, giving them a higher salary and not requiring out of hours working, the public can no longer see a GP at short notice. Consequently the simplest solution is to go to Accident & Emergency. So those departments are now doubling up as GP out-of-hours services.
From the start of the NHS and the introduction of National Insurance contribution, there has been sufficient income to fund the NHS and the remainder went towards old age pensions.
That was until part way through the financial year 2002/3 when NHS funding overtook NI contributions.
In the fiscal year 2013/14 the NI contributions were £107.7bn and NHS funding £129.7bn. Data on NHS spending related to HM Revenue & Customs tables reveals that the NHS consumed 14.7% of income in 1997 and 21.1% of income now. It cannot be allowed to keep consuming more of the available revenue. Other government departments also need funding.
The honest solution is to actually increase the NI contributions of everyone by 20% so that it matches present NHS expenditure and then rename NI to National Health Insurance. Now it will be directly linked to earnings and population and will be only what is affordable.
There will then be no prospect of political parties playing games with statistics in the run up to elections to con the voters into believing funding will be safe with them. If the people are then not happy with the service they receive there will be pressure to neuter the fat cats and get more clinical staff.
If waste is cut out and the service is run efficiently and the people still want an even better service then they will have to agree to increased NHI contributions. How about that for an idea?