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The author is a senior policy analyst at the think tank Nuffield Trust
The Prime Minister and his health secretary may have presented the abolition of the NHS England as a move towards democratization of the NHS. But the problem at the heart of the movement is money, and it remains.
When the 42 Integrated Care Boards (ICBs) balancing England’s NHS budget submitted plans for the fiscal year that begins in April, they were hoping to miss the roughly £6.6 billion mark.
This week we could cut the total number of staff in the NHS England and the Ministry of Health’s Department of Social Care, reducing the ICB in a similar way, potentially deducting a quarter of the gap at best. But Health Secretary Wes Street hopes that the shock move will underline how serious he is about eliminating the NHS’ inefficiency to close the remaining £5 billion gap.
His problem is that although there is definitely some inefficiency in some way, the more important driver of that trouble is the 2025-26 funds allocated to the health department within the budget, adding a real-world growth of about 1.5% from the previous year. This is less than half of the long-term average growth rate for NHS funds, slightly outweighing that of population growth adjusted for demographic changes.
A casual observer of the finances may alk in the notion that funding packages covering inflation and population growth, as well as higher healthcare needs associated with aging, can be considered “hard.” However, economists, including economists in offices for budget responsibility, have long recognized that healthcare is different from other sectors and services worldwide.
Technological advances elsewhere tend to reduce costs, but healthcare increases them by expanding which treatments are possible. As a result, it also expands what the public expects to receive. Therefore, the NHS and patients have thwarted the government’s attempts to contain spending within the original plan fairly well. In reality, health consumption tends to increase by more than twice the population growth.
Over the past 15 years, successive governments have not accepted reality, causing the NHS to fall from annual financial relief to the next bailout. This was disastrous for the plan. If the original budget is unrealistic, hand-to-mouth measures will be prioritized. The “efficiency” initiative focuses on short-term, non-recurrent savings. And initially, funds that rang out for investments in prevention or productivity improvements were raided to pay for a relentless increase in patient demand.
So, where does this assert that it leaves the street and that the NHS back will stop with him? He has two major courses of action, but neither is politically easy. He was able to level the reality of demand with the Ministry of Finance and taxpayers, and equalize with the public about how rising expectations can be met through national funding.
The global economic outlook suggests that initial appetite will be restricted, but the public says they are consistently supporting a higher taxation to fund the NHS. The second involves confessing to the public that the NHS (like all healthcare systems) involves rationing. This can occur in a planned and aggressive way – through engagement with the public, which is priority treatment and outcome (and more importantly not), or invincible and reactive as it is now. This creates a waiting list for millions and wide inequality. Access to care is determined by who screams the loudest and what new treatments the pharmaceutical company chooses to invest.
Street shows the courage to make the move to close NHS England despite previous declarations of top-down structural changes. However, a more important test of his temper has not yet come.
