Only by removing the budget ringfence can we modernise the NHS

Thomas Cawston
IN TWO days’ time, the chancellor will unveil the next chapter in the government’s efforts to tame the deficit and reform public services. As the largest public service, with a total budget of £107bn and employing over 1.3m people, the NHS should be at the forefront of his mind.

Three years ago, health ministers set out a brave new vision for health services that delivered better care at a lower cost. In the future, health service patients would receive the highest quality care in new settings, reducing reliance on the old bricks-and-mortar of big hospitals. Patients would be put in control of their care with more choice and access to information about the services on offer. New providers would be able to compete with the NHS to deliver top services and spread innovation.

Health ministers should look to the more reformed health services in Europe for inspiration. In Germany, for example, a third of all hospitals are run by the private sector. Patients can now choose to go to world-renowned chains of new hospitals such as the Schon Klinik – where care is specialised and coordinated around the needs of patients. And in one region in Finland, the authorities centralised all hip replacements in one purpose-built facility. The new Coxa hospital has reduced length of stay, slashed complication rates, improved productivity, and offers its patients a “quality guarantee”.

The government didn’t shy away from recognising what reform would mean: fewer hospital beds, a smaller workforce and less bureaucracy. But by protecting the NHS budget, the government protected the service from the need to change. Since 2010 the modernisation of services has all but stalled. The NHS still spends 45 per cent of its total budget on hospital services, compared to 10 per cent on community care. Over 6,000 hospital beds have been closed, but 14,000 were closed at the start of the last Parliament. While the government has been accused of “privatising the NHS,” the actual proportion of spending on private and charitable providers peaked at less than 9 per cent and has started to fall back.

In contrast, one of the big revelations so far this Parliament has been that cuts to public spending can create a “burning platform” for reform. Tighter budgets have forced the police service to close down some of their redundant buildings and collaborate with the private sector to modernise services. Fire brigades have faced a spending squeeze and embraced a new business model by moving their focus from solely fighting fires to preventing them.

The modernisation of the NHS is stuck in the slow lane, and the health service has struggled to keep up with rising demand. Rather than trying to keep a lid on this pressure by continuing to grow the health budget, the government needs to enact radical reform. Wednesday’s Spending Review presents the perfect chance to retake the initiative. Removing the ringfence on the health budget will spur the change that ministers want to see.

Thomas Cawston is research director at the independent think tank Reform. Flat-lining: Lack of progress in NHS reform was published on 19 June.