A not very healthy budget

The health department spends £116,900,000,000. £5,500,000,000 of that is on new buildings and equipment, and £12,500,000,000 is on pensions. The new GMS contract has cost an extra £8,000,000,000.

The Health department has an administrative budget for itself and its helpers of £218,000,000. This buys us 2245 staff, including 17 staff paid more than £150,000 a year and 54 staff paid between £100,000 and £150,000. There are a further 3536 staff in agencies.

Beneath the Department are the Strategic Health Authorities. Their budgets run to £6,000,000,000. The national quangos include the Office for Strategic Co-ordination of Health Research, the National Institute for Health Research, the National Institutue for Health and Clinical Excellence, the Care Quality Commission., the NHS Litigation Authority, the Medicines and Healthcare products Regulatory Agency, the NHS Purchasing and Supply agency, the Council for Healthcare Regulatory Excellence, the Health Protection Agency, the National Patient Safety Agency. the NHS business services Authority and the NHS Institutute for Innovation and Improvement!

There should be plenty of scope to amalgamate, streamline and remove bits of all those. The Litigation Authority now has a budget of £1.1 billion. Raising quality would cut the costs of this very large complaints department. Maybe we should ask whether it is wise to have so much litigation against ourselves, as it is our NHS. Wouldn’t it be possible to have a cheaper and simpler Independent Adjudicator who made quicker and cheaper settlement of grievances against the NHS?

When I ran the Welsh Health Service I streamlined the top of the system and saved substantial sums by doing so. For example, I removed the pay twice approach I inherited of having both a Permanent Secretary to the Health department and a CEO of the NHS, by amalgamating the posts and getting rid of one of the offices. I asked the pharmaceutical companies to deliver the drugs directly to the hospitals, to remove the need for an expensive purchasing and warehousing business within the NHS itself. Cutting out central warehousing and a supplies department saved money, cut stocks, and meant the hospitals were using more recent pharmaceuticals. We still got the drugs at the same prices.

The drugs bill is large, amounting to £8,000,000,000 for GP prescribed drugs and £3,500,000,000 for drugs in hospitals. We do not want to deny people drugs they need, and may need to add a few more to the list. What we also need to do is to cut down the waste which comes from overpresribing or prescribing to people who do not want to take them all. We need infection control systems which rely more on thorough cleaning and less on drug taking in hospitals. We need to use good generics where possible. We need to remove waste that comes from having to throw away out of date medicines from stock.

We need to ask whether we require such top heavy administrative systems as we currently have with Strategic Authorities as well as PCTs.

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49 Comments

  1. Posted July 26, 2009 at 8:00 am | Permalink

    John

    What exactly do all of these additional organisations you list do ?

    I am absolutely staggered at this amount of quangocracy.

    Clearly there is no way you can run any organisation efficiently with all of these different organisations, pulling in all directions to increase their own influence, and to substantiate their own existance .

    Once again its is Govermnent and management by committee, it always fails, it takes too long to react, and never reacts in a fullsome way (usually a compromise of various thoughts)

    Thank you for bringing this out in the open (unless I am reading and listening to the wrong media) at last.

    One has to ask why the Media have not run with any of this over the years. Perhaps they will now its on your Blog, although I do not hold out much hope of Browns Broadcasting Corporation
    being very critical.

    Meanwhile some nurses are being asked to work extra shifts due to self imposed (in many cases) staff shortages, bought in to save money.

    Whilst I appreciate that advancement in medical science will always be a complicating factor, it just seems that this is yet another department that is out of control.

  2. Posted July 26, 2009 at 8:27 am | Permalink

    This is what we need. More of the same, please!

  3. Posted July 26, 2009 at 8:46 am | Permalink

    How about bringing back tax relief on Private Healthcare. It just seems a no brainer to me. These people will still be paying tax and NI to the NHS but also increase the private sector care industry and ease the burden on the NHS.

  4. Posted July 26, 2009 at 8:46 am | Permalink

    I found the last paragraph that fell onto the floor under your desk.

    “We need to privatise the NHS and make the money follow the patient. We need to define a set of core services to be funded by transfer payments from general taxation to be available free at the point of delivery for anyone that needs them. We need to reinforce the GP/Patient realtionship in order that the GP becomes the expert gatekeeper to the rest of the health establishment.”

    • Posted July 26, 2009 at 2:44 pm | Permalink

      Yes indeed.

      The power of inertia should not be underestimated, but imagine we lived in a world where we had a number of private hospitals competing for government cash, would anyone (apart from 25 idiotic labour MP’s) be calling for the total nationalisation of the healthcare industry? No, obviously not. And that’s why we should privatise it.

      I despair at our political process which means this obvious truth simply cannot be said for fear of the other side shouting pointless scare stories like “Ah you want to privatise the NHS, people will be left to die untreated” blah, blah

  5. Posted July 26, 2009 at 9:20 am | Permalink

    Give a wastrel Government an endless borrowing capability and they will exceed it. Ergo, £175,000,000,000 BORROWING sum about to be declared too little too late!

  6. Posted July 26, 2009 at 9:42 am | Permalink

    JR, You may be familiar with the motability scheme, which in very simple terms, through the disability living allowance helps disabled people get cars. So the government helps people with some money but does not take it upon themselves to actually run the factory that produces the cars (because they would be bad at it and choice would be removed, along with competition), instead you have competition, choice and high quality.

    Yet, this is precisely what we do when we insist, not only in paying for medical treatment but actually running the the hospitals. A surer route to cost over-runs, monopoly supply and lwo quality I cannot imagine. Can we not simply privatise every hospital in the land and pay for people’s treatment?

    I cannot seriously believe anyone doubts the efficacy of this and yet not a single MP in any parliamentary party will propose it

    • Posted July 26, 2009 at 2:20 pm | Permalink

      A dynamic, complex organisation where change, both in diagnosis and treatment is an everyday occurance, where the workforce is highly skilled, qualified and dedicated is not a suitable organisation to be run by a large, sluggish bureaucracy. To be fully effective, the the NHS needs to be structured in order that it can respond quickly and think outside of the box. With a workforce composition with an expertise base so wide it should not be necessary to employ Consultants (other than the Medical variety) so prominent in the upper echolons of bureaucracy but source its requirements from within.

      Mr. Fairney has grasped the importance of this and his proposal to privatise the health service could well be the way to go. It excudes the Govermnet from the day to day running of the service (a very good thing) and invites a new, more focussed, more local, more immediate approach to the delivery of health care.

  7. Posted July 26, 2009 at 9:56 am | Permalink

    Apart from overseas aid isn’t this the one department that is going to have its spending ring fenced by a Conservative government? There seem to be massive opportunities for savings but presumably because no one has yet come up with a way of counteracting Labour’s lies about sacking nurses and doctors it has been deemed to be off limits. It is sad to think that given so much time to counteract this, nothing has been done other than to slavishly accept Labour’s extravagance.

    • Posted July 26, 2009 at 1:42 pm | Permalink

      100% correct! The Conservatives need to embark NOW on a campaign to persuade the voters that cuts in spending need not equate to cuts in front line services. Furthermore, so inefficient is the NHS that big cuts could be made and services could still improve eg by removing the ‘target’ culture and devolving decision responsibility and accountability as far down the chain as possible. The same applies to education.
      As for overseas aid, more good would be done if the Conservatives fought for the EU to provide a level playing field for Third World agricultural products. I wonder just how much current overseas aid actually reaches the intended recipients?

  8. Posted July 26, 2009 at 9:59 am | Permalink

    JR: “There should be plenty of scope to amalgamate, streamline and remove bits of all those. ”

    The word you are looking for is ‘Abolish’.

    Look what happened to the office of supervision of this or that, introduced by the last Tory administration. They have all been infiltrated and converted to instruments of Social policy by the Labour government.

    The aim of the next Tory government should be to remove every tool in the box and for that purpose only the word ‘abolish’ will suffice.

    Leave anything behind and the next Labour / Socialist / Lib dem government will just pervert its original intent.

  9. Posted July 26, 2009 at 10:21 am | Permalink

    Does your £117 billion include the £20 billion spent on Health and SS by the “devolved spending” offices for Scotland, Wales and NI?

    If we assume that the £117 billion spend is spread across 25 million households that would be around £400 a month on average per household.

    As far as I can gather, that would cost you a similar amount in the US with an HMO insurance company for a couple of thirty year olds with two young kids. For a couple of sixty year olds with no kids it could be £600 a month. You would probably have to pay at least the first £1,500 of a claim and sometimes ten to twenty pounds to see a GP on the HMO’s list of contracted primary and secondary care providers. The US has numerous different plan types and the locals consider them all expensive but the medical care provided is considered good. A job with family health care included is worth having.

    Perhaps JR, you should consider separating the state purchaser of health care from the state provider of health care. An insurance based scheme similar to the US or the Swiss for instance, with a basic state contribution for plain vanilla cover?

    • Posted July 26, 2009 at 11:55 am | Permalink

      I have just been reminded about an episode of ER. The newbie intern on assessing his patient in the Emergency Room, orders numerous tests on the patient. The seasoned Resident (UK=Registrar) says, “you have just ordered $19,000 worth of tests”.

      Can’t wait till you get to Education JR.

  10. Posted July 26, 2009 at 10:45 am | Permalink

    The co-terminosity of PCTs with local authorities was always the hidden agenda. Thus Surrey has one PCT for 1.2m people, while all the little labour London authorities have one PCT for little over 0.2m. Some of the northern PCTs serve populations approaching 0.1m Needless to say they are mainly metropolitan labour-controlled. Thus”Labour PCTs”vastly outnumber “Conservative” ones.

    There is huge scope for thinning out the PCT/SHA axis. The new South London merged NHS Trust will still have three seperate PCT purchasers. Its nonsense, even if those “purchasers” knew their proverbial a from their e.

    DH employs vast numbers of management consultants posing as officials. When I was in DH everyone on my floor had an email address ending in @pwc.co.uk. A lot of so called “consultants” are disgraced chief executives that have been pensioned and compensated, and come back to do “projects” for DH as 2consultants” so as not to jeopardise their pay-offs.

    It all stinks, John. You have much to undo.

  11. Posted July 26, 2009 at 11:01 am | Permalink

    You draw attention to the Litigation Authority. To my mind, there ought to be strict limits on payouts for loss of earnings: those with large earnings who wish to do so can take out separate insurance. The payment of £5 million to Leslie Ash because her MRSA infection prevented her from earning large sums through film acting really isn’t defensible.

    On the other hand, there is too great a tendency for cover-up, with lessons not being learned by those who make errors – surely as important as compensation in many cases – because the basis is adversarial litigation. Masked incompetence and carelessness will produce more victims requiring more treatment, and will be more expensive in the longer run.

    Reply: This must be the dearest complaints department in the UK by miles. More attention to the qualilty of service could cut these bills by a big amount. No multinational would put up with a £1 bn complaints bill each year

    • Posted July 26, 2009 at 9:07 pm | Permalink

      Very true. Rescinding is not the way forward though.

    • Posted July 27, 2009 at 8:43 am | Permalink

      Some interesting observations about claims from a clinician’s view here:

      http://www.josonline.org/pdf/v15i3p261.pdf

      Although he’s from Hong Kong, similar principles apply everywhere. He reviews practice in several countries, including New Zealand where they have a system that sounds similar to what you are proposing. A high claims culture becomes costly, not only because of the insurance payout, but also because of excessive unneeded defensive treatment and testing, or an unwillingness to treat at all because of the risk of a claim.

      He omits to mention the costs of masked incompetence, or actions designed to meet targets regardless of consequences for the patient. Examples include patients not allowed out of ambulances into A&E so that A&E meet targets for treatment times; early end to treatment before patient recovered to meet turnover target (this has happened to me, turning recuperation into months instead of weeks) – etc.

  12. Posted July 26, 2009 at 12:26 pm | Permalink

    As part of Brown’s double-counting problem at the Treasury, did he not transfer the NHS Pensions from HM Treasury to the NHS itself making it look like a huge leap in payroll costs ?

    I seem to recall it was 3-5 years back and it suddenly boosted NHS spending by a simple accounting reclassification of Pension Contributions.

    This is right alongside disguising Benefits as Tax Credits and showing increases in Credits as reducing Income Tax take…..thus falling tax revenues may be a result of more people qualifying for Tax Credits as employers cut wages

    • Posted July 27, 2009 at 8:19 am | Permalink

      Oooh nooo. Let’s not start on the scandal of the NHS pension scheme. The appalling administration of this is the clearest evidence of the endemic producer capture in the NHS. Last time I did some work on the support costs they exceeded 30% of salary roll. In other words, in common with the rest of the public sector, no NHS employee pays any tax or NIC. Such notional deductions from their pay go straight round the system and back into their pensions.

  13. Posted July 26, 2009 at 12:26 pm | Permalink

    I think large savings can be made over the next twenty years by reducing the regulatory authorities control over genetic transcription drugs. These are drugs that are highly specific to DNA and must be custom made. Drugs, such as oligo-nucleitides can clamp onto bits of DNA and can either stop the protein from produced or allow mutated DNA to start working again.

    Whilst these drugs must be customized the chances of off target hits are vastly lower than traditional “small molecule” drugs whose effect can really only be determined bY large very expensive clinical trials. They are also much more reliable than small molecule drugs that often only have a half chance of working.

    In twenty years time we will look at todays small molecule drugs as we look at 19th centyet medicine today. It is vital DNA transcritption drugs are advanced to save money.

  14. Posted July 26, 2009 at 12:57 pm | Permalink

    Assuming that the Conservative Party is in power until 2020 and that financing for the Department of Health is ring fenced, how would funding improve front line services?

    That is, is it possible to offer some indication/ some guidance about how a new government would spend its money ? Of course this whole area is a political and financial minefield but where do you see the NHS in ten years time?

  15. Posted July 26, 2009 at 3:17 pm | Permalink

    Mr Redwood, your crew will be in office soon enough – what will they change?

    ===========

    I live in Belgium, where health-care is generally excellent, and waiting lists minimal. I’d love to have a better understanding of how different countries organise and pay for their health systems.

    To save trying to disentangle all the dross on the internet, could you or any poster here point me towards any links or books that make sense of this issue?

    (Allow please for basic literacy and numeracy, but no specialised knowledge.)

  16. Posted July 26, 2009 at 4:30 pm | Permalink

    Certainly we could start with an “administrator to Doctor” or an “administrator to nurse” ratio on the lines of the “pupil to teacher” ratio at schools. Find out which hospital has the lowest percentage of non-medical staff and demand that they all reduce to that level. If one can do it, all can.
    About a couple of years ago or so, two of our local hospitals, on sites maybe 15 miles apart, merged (well administratively). I was recently told by an accountant working for one of them that the Hospital Trust had taken on about another 20 staff as “co-ordinators” and that they, and of the rest of the staff were still all there. However the number of higher medical posts had been reduced and the doctors were frequently forced to travel between the two sites. Even my informant was disgusted, but wouldn’t say anything publicly as it could affect his job. But there has not even been any administrative staff reduction by natural causes and they still re-fill any vacant posts.

  17. Posted July 26, 2009 at 6:17 pm | Permalink

    Anyone who thinks private healthcare is the way forward should watch the film ‘Sicko’ by Michael Moor?

    http://en.wikipedia.org/wiki/Sicko

    Read todays story about the whistle blower Wendell Potter today in the observer. He was an executive in an American healthcare insurance company and believes the film to be accurate.

    http://www.guardian.co.uk/world/2009/jul/26/us-healthcare-obama-barack-change

    Remember the banking crisis? Customer was and is king and the efficiency of the system saved the taxpayer a fortune Huh? The stakes are far higher here and not just for the individual.
    What planet are you people on. The NHS need improvement not abolition.

    • Posted July 27, 2009 at 8:34 am | Permalink

      Careful, Michael Moor is very politically biased. In common with Al Gore’s epic on MMGW I would treat anything Mr Moor says or produces with an extremely large pinch of salt.

      Ditto the Guardian.

      And in general the posters on here are not saying that primary healthcare should not be funded by transfer payments administered by the state. For various reasons it is probably the least worst option that fundamental medical care should be nationally insured so that everyone has access to a set of core services free at the point of delivery. But we must not confuse funding with provision. To free the healthcare and medical care industry from the dead hand of centralised state control will pay dividends in efficiency and lead to massive improvements in the lot of the currently wildly exploited workforce.

      My old mum trained as a nurse at Barts in 1943 and was taught an awful lot about primary healthcare and cleanliness. On her recent trips to hospital for various bits of maintenance she was absolutely horrified at the appalling basic standards of ward managment and the ‘filthy dirty conditions’ – her words. Nationalisation has progresively lead to worse and worse standards as more and more producer capture and bureaucracy have grown up.

      And she is not alone in this judgement. Another lady friend of mine, a contemporary, now resident abroad, made roughly the same comments about the state of hospitals.

      State control is never the guarantor of quality or success.

      But for the avoidance of doubt I continue to have a great deal of respect for the clinicians in the NHS. But I also despair for them as they are universally exploited and frustrated by the state monopoly just as we are short changed by it.

    • Posted July 27, 2009 at 9:38 am | Permalink

      I emigrated to Australia in the 1960s. To my horror a young mum was wandering round the streets with a temperature of 104. She had, she thought, some fever or other. I asked her why she didn’t go to the doctor. “I cannot afford it.”
      Even so, this is no excuse for the present waste of our money at a time when our national debt is approaching a trillion pounds.

      • Posted July 28, 2009 at 10:31 am | Permalink

        Quite. And no-one in their right minds would accept such a situation. But, the State is just no good at dealing with the millions of equations that constitute all the millions of individual interactions in a free society. It replaces locally run charitable and voluntary help with huge top down bureaucratic rationing that has no incentive or abillity to distinguish between your young mum and the scrounger. Given that the various bits of the health care world were liberated from the dead hand of statism it is quite easy to imagine how human compassion in the various bits of it would sort out a way of providing help to your young mum at no immediate cost. And liberating health care does not mean privatising all of it commercially. Again, there are all sorts of organisational structures that will evolve, as soon as we can get the state out of it all.

    • Posted July 28, 2009 at 8:44 am | Permalink

      Moore is not accurate; and anyway there are a lot of models – German, French, Italian, and Spanish to name 4 large systems that ahppily rely on a mixture of public and private hospitals without monolithic bureaucracy. And generally get better outcomes than we do.

      • Posted July 29, 2009 at 4:21 pm | Permalink

        All very interesting. Tap Tap Tap… Why does everyone just know it will end up? Road tolls are probably the best way forward in raising taxation for the roads. The population know exactly how it will turn out, sat in a traffic jam and paying the same taxes with a pound a mile for the pleasure and this is why they are dead against it. How about a toll motorway at £4.70 each way? No subsidy there. Privately owned train journey 50 miles out from London for five people return £200+. Buy your own train! A Daily mail nonsense campaign is needed. ‘Subsidy Alert!’ Never happen. Charity motorways anyone? I could donate a couple of bags of sand and do a bit of digging with my own tools on Saturdays. Wife/weather permitting.
        What can we get away with and how long can we get away with it will be the motto of and insurance/ medical company involved in the state system. Just like the pharmaceutical firms milking the system/taxpayer for all they are worth. You just know the taxpayer will get even more stuffed than he already is. Oh yes he will!
        Private healthcare will turn out just the same way. Comparing German systems with British ones is not real. They will never be the same as the culture is completely different. Compare the American health system as that is the way it will go. To say you have to take Michael Moore with a bucket of salt is insulting ones intelligence. I can sort the facts out for myself thanks. The film is primarily for entertainment and for an American/world audience lays it on pretty thick to get the story across.
        What age are you in? Nurses on bikes, rotund cheery doctors, scary matrons, set in an England that never was and never will be? (This England probably existed for about a thousand people in the 1930’s.) Healthcare run on charity? Millions cheered when it was introduced and for good reason.
        If you want to see how your free market wet dreams will turn out just visit Russia. First you get the money, then you get the power, then you get the money.

        • Posted July 30, 2009 at 3:03 pm | Permalink

          Bazman, in what way is the German ‘culture’ different to the British one? We used to pride ourselves on a talent for compromise – what is there about our ‘culture’ that obliges us to choose between state-provision and a market free-for-all? Can we learn nothing from other countries?

          (One fool can ask enough questions to keep a hundred wise men too busy to answer them all. Sorry.)

  18. Posted July 26, 2009 at 6:23 pm | Permalink

    The NHS is bloated and inefficient; it belongs in the 1940s with all the other monstrosities created by the 1945 Labour government, like British Railways and the National Coal Board.

    I just can’t understand why you conservatives don’t grasp the nettle and begin working to privatise healthcare.

    You might be surprised just how many ordinary people are fed up with paying through the nose for the NHS – and then not getting the treatment they need, when they need it.

  19. Posted July 26, 2009 at 6:59 pm | Permalink

    Litigation: what can you expect if every single girl and boy who leaves school wants to be a lawyer?
    My dog was diagnosed a couple of days ago with a faulty valve in her heart. The cardiologist happened to be in the Vet’s. He kindly explained what was wrong and gently said that there wasn’t really much point in doing a valve transplant.
    There are usually several vets around in the practice and you get seen fairly quickly. They also run a sort of hospital for animals, together with an insurance policy which does not cost an arm and a leg. The nurses are humble enough to clean up the mess and be there for unpleasantness; and they actually seem to love their animals.
    When our vet’s went downhill, we simply transferred to the one round the corner.
    I do not see an excellent blog on veterinary practices.
    But we humans, of course, are different.
    Aren’t we……..?

    • Posted July 27, 2009 at 6:36 am | Permalink

      PS I need to interpret this!
      My simple point is that the (independent) Vet service seems to work in a caring, professional and very efficient way. The NHS costs a LOT more and it is therefore much less efficient in providing health services. I am simply asking why we need all this control, because in my own opinion we actually don’t.

      • Posted July 27, 2009 at 7:19 pm | Permalink

        Mike

        In answer to your question, Dogs and cats cannot complain or sue the Vets practice.

        When an animal gets very ill it often gets put to sleep (although less so now as vets realise, just like our dentists who do not like extracting teeth, as future income is lost) not moved into a care home.

        Vets practices, like hospitals can vary in skill and care, but can have very different charging structures. It would appear though that most have a loyal customer base.

        I think Vets have a seven year training and are all (i think) private, and Doctors Five years NHS and Private. Ongoing training for both is usual.

        Vets Practices are usually small and flexible establishments with the owner working with His/Her finance at risk.
        NHS Hospitals are usually vast and infexible, decisions being made by committee and employ hundreds/thousands with no personal finance at stake.

        • Posted July 29, 2009 at 6:57 am | Permalink

          My daughter is a vet in Australia. What you say is correct. Actually vets do often work in practices which are owned by businesses. And these businesses make very sure that there is as little sueing as possible!

  20. Posted July 26, 2009 at 7:15 pm | Permalink

    This bears out my views that QUANGO’s & procurement costs need reducing in the NHS ! We need a better health service & smaller government. As ever John has shown the Tories a positive way to go about this.

    Will Andrew Lansley listen to this ? I do hope that the shadow health secretary will pay heed to John Redwoods wisdom on NHS reform…

  21. Posted July 26, 2009 at 8:15 pm | Permalink

    Monetarists argue that the primary motivation for excessive easing of central bank policy is to finance fiscal deficits by the central government. Hence, restraint of government spending is the single most important target to restrain excessive monetary growth.
    The more government grows, the more money they want (and need) to expropriate from the only productive part of the economy – the private sector. The more government expropriates from the private sector the smaller the private sector becomes. The eventual outcome is that government runs everything – a bit like Venezuela today.
    The Bank of England was the government’s facilitator, keeping their costs low, keeping the economy flush with credit, keeping tax revenues high until finally, the excesses they allowed and encouraged ended in tears with the collapse of Northern Rock, RBS and HBOS.
    Government has become too big and too expensive. By government I mean the civil service, the NHS, the Department of Works and Pensions and all local authorities and quangos. The private sector cannot afford to support this leviathon anymore. I am counting on the Conservatives to make big cuts,

  22. Posted July 26, 2009 at 9:22 pm | Permalink

    One by-product of the exponential increase in overseas travel on holidays and business by UK citizens over the last 30 years is a growing realisation that, far from having one of the best health services in the developed world, we have in fact one of the worst. This is not because of a lack of dedication, talent and training of the professionals working in the NHS, it is because of the socialist-statist model, some of the results of which which you summarise above. Unless this is changed in a revolutionary way we are condemned to squandering more and more money on a health system which falls increasingly short by international comparison. Perhaps it is too risky for David Cameron to address this issue before the election, but it is to be hoped that the next Conservative government will tackle the NHS black hole.

  23. Posted July 26, 2009 at 9:37 pm | Permalink

    I’m not quite sure I understand what an “administrative budget” means, nor what the 2245 staff employed in “administration” actually do. The concept of having full time “administrators” seems to be a peculiarly public sector one. If you look in any private company, even a big one, you won’t find “administrators”. You will of course find HR people, Finance people, and Managers – but the NHS has those too, separately from the “administrators”. I have to say that I strongly suspect that the £218 million administration budget for the NHS actually adds no value at all to the service.

    In my experience, if you talk to front line NHS staff, you find a deep suspicion of the Conservative party and its talk of “efficiency”. But if you ask them whether they think resources go to the administration that should be coming to them instead, you quickly find a large measure of agreement. Doctors, nurses, ward cleaners and other “doers” in the NHS should be seen as our allies in the NHS debate.

    By the way your figures once more bring the government’s budget crisis into focus. If the NHS were completely closed down tomorrow, it would still leave a budget deficit bigger than any run by any previous government. That’s a measure of the mess we really are in, thanks to Mr Brown.

    • Posted July 27, 2009 at 6:43 pm | Permalink

      Can anyone explain why some hospitals have more non-clinical staff than clinical staff? (e.g. The Royal Berkshire Hospital). Is everyone aware of the hundreds of “volunteer” workers (remember – volunteer = unpaid) in every hospital? “Volunteers” include the Salvation Army, volunteer drivers, Red Cross tea, coffee & sandwiches, book services in the wards. etc. Think of the millions of pounds that they save the PCT budgets!

      • Posted July 28, 2009 at 9:33 am | Permalink

        Just think how much Home carers save the Country.

        I well understand the term, “but its my Duty” but these people are often taken advantage of, with little help being offered by the so called proffessionals, to help them Care.

        Many peole are now discharged from Hospitals earlier than they would normally, if they have a carer at home.

        Interesting that with the merger of the Royal Berks and Battle Hospitals, we now have exactly the same number of beds that we did, when we had two Hospitals on different sites.

        This fact came from the Chief Exectutive, to a question I posed to him at an after dinner speech a couple of years ago.

        So now we have the Battle Hospital site sold, and now fully developed by Tesco.

        The Royal Berks Hospital site is now crowded, and future growth in bed numbers if any is possible, is limited, for an area where housing and demand is growing.

        Joined up thinking perhaps not, but some income generation made to pay for the move, by selling off the land at Battle Hospital.

        Future problem when we need more beds, we need to purchase a new site as well as build, rather than just redevelop a site already owned.

  24. Posted July 26, 2009 at 11:12 pm | Permalink

    When it comes to drugs budget and new patented drugs, why can’t NICE be allowed to buy the UK patent and then, pay for the drug to be made?
    Imagine a new cancer drug, which costs 50K per annum currently, Nice currently say no, BUT if NICE negotiated (not allowed at present) and bought the UK patent (not allowed at present) then the drug could cost 200 pounds per year?
    Once NICE is able to buy a UK patent for a drug, the companies can then compete ton price to make it, with the inventor having an advantage thus able to win at lower cost.
    NICE must use it it’s massive near-monopolistic buying power to OUR advantage

    • Posted July 27, 2009 at 3:13 pm | Permalink

      If a new drug’s patent was allowed to be bought, there would be no incentive for drug companies to do research. Remember for every effective drug that appears on pharmacopoeias, a dozen or so will have fallen by the wayside at a cost to the companies of millions of pounds.

      • Posted July 28, 2009 at 8:24 am | Permalink

        The reason the drugs are patented is so that the companies can make money off the patent. The patent is what has the value, thus if the UK patent was bought (licensed) by the NHS the drug company would be assured of making a steady income in the UK from the regular licence payments. Drug companies would compete harder as there would be less money for small improvements. The risks of a patent being superseded or the NHS not being able to fund buying your drug would be vastly reduced. Today we cases of drugs costing 50K+ with life extended by 6 months, and NICE having to make judgement calls on effectively who dies when. The big problem is NICE is NOT allowed to negotiate the price, it has to take what it’s given. The easiest and biggest change any government could and should make is let NICE negotiate!

  25. Posted July 27, 2009 at 9:09 am | Permalink

    All those quangos are replicated in every other organisation that the government runs. If something goes wrong or there is some criticism of an organisation, instead of firing those responsible which would be the action of any private organisation, the Government provides a quango to go around checking and and snooping in order to try to prevent any recurrence, and at the same time placing the responsibility elsewhere and avoiding blame. These quangos never do any good, because the next incident occurs somewhere outside their mandate, thus resulting in either expansion of their staff and powers, or the creation of yet another quango. The quangos are never disbanded because the fact that there are no further incidents of the type that led to their formation is proof of their effectiveness!

  26. Posted July 27, 2009 at 10:54 pm | Permalink

    Mr Redwood,
    Your proposals, in the current climate will be termed extreme. But they carefully skirt round the periphery of how to provide a high quality, cost effective health service. UK health spending as a percentage of GDP has climbed from one of the lowest in Europe to above average. But in terms of delivery (like survival rates for cancer) we are still near the bottom. In Healthcare, the UK is still the sick man of Europe, but now we pay for it.
    However, the problem of how to combine high standards of service with low costs is universal. So whilst we may learn from other countries experiances, we will not get a perfect solution.

    However, maybe a starting point is to remember.
    1) Most will accept that monopoly provision, especially when legally enforced tends to provide worse outcomes than where there is plurality and competition.
    2) An inefficient organisation is not just bad at serving the consumer. It is also poor at effectively utilising its resources. In Healthcare the biggest resources are the doctors, nurses and other health professionals.
    3) Where you have multiple and obscure targets, there needs to be some sort of measurement. But at the end of the day you cannot objectively compare one target (e.g. survival rates from strokes) with another (infant mortality). You just have an opinion. And when you have a government who believes in spin, the bits of data that come to promience are the one’s that either show the government in a good light, or the one’s that are appaulling (Stafford General Hospital).
    4) When you provide universal health care, free at the point of delivery and without defined limits, and on an equal basis, you will get ineffective usage of resources. There will always be over-provision in some areas, under-provision in others and poor service that escapes the figures. Recognising the limits of what we can do is often the first step towards achieving the best that we are able.

    Reply: There was nothing “extreme” in what I wrote. I set out the financial facts. It was not a piece setting out major reform of the Health Service, but one highlighting the high costs of the top down management system adopted.

  27. Posted July 28, 2009 at 12:45 pm | Permalink

    We should privatise every acute hospital in the country, let doctors decide where to send patients, and in each case let the hospital send the bill to the government. Broadly speaking, that’s what large parts of Europe do.

    It probably wouldn’t be any cheaper than now, but at least the money would go on treatment. The government bureaucracy could be shrunk massively once the DOH is no longer trying to run everything.

    I analyse health markets for a living. It’s hard to think of anywhere apart from the UK where using the private sector is automatically considered wicked by the authorities.

    Drug pricing is an interesting issue. New treatments are getting more and more expensive. We already use generics to a very large degree in the UK, so for branded treatments I suspect we are headed for either price controls or greater use of rationing.

    • Posted July 30, 2009 at 3:07 pm | Permalink

      AndyC, could you do me the favour of pointing me towards a straightforward layman’s guide to different ways of financing health-care, (book or internet link – equally useful)?

      Thanks in advance if you’re able to oblige.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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