John Osmond questions how far we can insulate ourselves from the English health service

December 24th, 2013

In an interview with Adam Cairns, chief executive of the Cardiff and Vale Health Board in the current Winter 2013/14 issue of the welsh agenda he says the Welsh NHS can be insulated from the increasingly market-driven health service in England. As he puts it, “Although they’re commissioning more and more of their services from the private sector, at the end of the day the state still pays the bill.”

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The problem with this is that the amount the state will be paying in future is likely to fall substantially. There will then be a knock on impact on the Welsh block grant as a result of the way the Barnett Formula, which determines the amount the Welsh Government receives, is calculated. These implications were made transparently clear in a speech Prime Minister David Cameron gave to the Lord Mayor of London’s banquet in November. He said his government was sticking with the task of bringing down the deficit, and then added, “But that doesn’t just mean making difficult decisions on public spending. It also means something more profound. It means building a leaner, more efficient state. We need to do more with less. Not just now, but permanently”.

This is a significant change of emphasis that will have major consequences for Wales. When he became Prime Minister three years ago David Cameron said he hadn’t come into politics to make cuts. They were being forced on him by circumstances. Now, however, he is talking about a permanent project of building a smaller state. Certainly, that is what Welsh Health Minister Mark Drakeford believes. As he tells the welsh agenda, if David Cameron wins the general election in 2015, he will have another five years to pursue a smaller state, after which “the NHS in Wales will be a very different organisation to the one it is today”. That is why he believes the general election will be decisive in influencing future planning of the Welsh NHS. For, as he says, if Labour wins, although austerity measures would have to be continued for a while, at least there would be a UK government in power that believed in growing state services rather than reducing them.

The reality is, however, that whatever government is elected at Westminster in 2015, financial pressures on the Welsh NHS will be inescapable. Last September the Wales Audit Office report revealed that if the Welsh Government’s spending allocations continue unchanged then health spending will rise from 42 per cent to 57 per cent of its overall budget within a decade. In the welsh agenda David Phillips, an economist with the Institute of Fiscal Studies, sets out in stark terms what this would mean for spending on other areas such as local government and economic development. The Welsh Government has changed tack in its budget for 2014-15 and is planning to increase real-term spending on health and social services by 1.3 per cent. But that means spending on local government will fall by 9.1 per cent and education by 11.5 per cent. If this were to continue for a decade then the Welsh Government’s budget would be distorted beyond recognition.

In their interviews with the welsh agenda both Adam Cairns and Mark Drakeford acknowledge this reality. Drakeford has some interesting ideas about how health and social services could be redesigned to deliver services more cheaply and efficiently. Tackling the 20 per cent or so of medical interventions which he says have little or no benefit is one. Recalibrating waiting lists so that a points system is deployed to prioritise patients is another. Adam Cairns is thinking about alternatives to the way the market is used in England to produce health efficiencies and drive down costs, suggesting more transparency and reporting of results – a competition of naming and shaming between hospitals.

If they are to work such ideas will demand a major culture shift in the way the Welsh NHS is managed. Some heroic optimism is required to envisage that the necessary savings will be achieved without making the service unrecognisable compared with the one we have today. But at least we should welcome the fact that key leaders in the Welsh NHS are facing up to the difficulties they face.

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John Osmond is the editor of Click on Wales.

3 Responses to:“How sustainable is Bevan’s NHS?”

  1. Peter Hugh Charles Davies says:

    When Mr Mark Drakeford was made the so called Health Minister of the Welsh Assembly approximately 6 months ago, it was said that he would reduce waiting list times.Now six months after he has been in office waiting time for cataract Procedures at the Royal Gwent Hospital Newport has increased by 50%.
    Best thing which you can do Mark is to give the job of running the Health Service in Wales back to Westminster whose waiting times for English Taxpayers are often half what they are in the Principality

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  2. John Winterson Richards says:

    No, to answer the question in the heading frankly and directly, ‘Bevan’s NHS’ is not sustainable – but Beveridge’s could be.

    Although it is an exaggeration to say the British treat the NHS as ‘a religion,’ it does have one thing in common with a religion – a reluctance to question orthodoxy. In particular, the British people have been led to equate universal healthcare free at the point of delivery with the super-centralised model imposed by Bevan. Most do not seem to be aware of the fact that nearly all developed countries have universal healthcare but it is hard to think of another major developed economy that adopted the Bevan method of delivery. Indeed, the initial acceptance of the Beveridge recommendations by the Conservative Sir Henry Willink, on behalf of the Wartime Coalition, envisaged a more decentralised public health service. Bevan’s contribution was to replace this with a centralised, ‘nationalised’ model which conformed to the ‘big is beautiful’ dogma then in vogue in socialist circles. That dogma was imposed throughout the economy, but soon proved disastrous and was eventually abandoned in every other sector but health. Not even the Labour Party would adopt that structure if we were setting up an NHS today. Even Tony Blair was trying to retreat from it in the end.

    The national government, be that Wales or the UK, should indeed remain the major funder of health services in this country, but that does not necessarily mean providing all those services directly. On the contrary, a funder/provider split is the best antidote to all the quality issues that have long been suppressed by the quasi-religious orthodoxy but are now being exposed in Stafford and the UHW, and through the courageous efforts of Ann Clwyd and others.

    The NHS must change if it is to be preserved. This is understood in England. Wales has the opportunity to lead the way but, in healthcare as in education and other public services, is more likely to remain the most reactionary and unimaginative part of the UK so long as we are in thrall to a Labour Party devoted to a false image of Bevan.

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  3. KenJones says:

    Mark Drakeford ends his “Agenda” interview by observing that “In England the NHS is becoming a lottery driven by the pursuit of profit … In future, if this government are given another five years, the bottom line for the NHS will be the extraction of profit. The question then will be how Wales will escape the same fate”
    Much the same applies to other social services in Wales and to the whole Welsh social democratic tradition of governance.(which we share with Scotland). The next Welsh government will then be either forced to move back closer to the English neo-liberal ideology or it will have to press for a level of devolution at the least similar to that at present enjoyed by Scotland. That would requirea much more resolute and radical raft of poilcies than that which the present Welsh Labour government finds comfortable. It will also raise the question of whether a Union is possible or desirable between a neo-liberal England and a social democratic Wales. This will also put the squeeze — and about time !– on the ambiguous position of Welsh Libs Dems and Conservatives.My own best hope would be a Welsh Coalition government in which Labour would be sufficiently weak and Plaid sufficiently strong to move us forward. closer to where Scotland now stands, and radically to advance our social democratic political culture.

    In short,the returrn of a coalition government at Westminster would force a crisis — and hopefully an acceleration — in the unfolding devolution scenario in Wales. The implications here in the case of a Labour victory at Westminster are, of course, much more speculative…

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