Why are there cuts when total spending carries on rising?


        There has been one of those pointless and repetitious British debates about public  spending over the last fortnight concerning health spending. The government  says they will increase health spending every year in real terms. They mean by this they will ensure a cash increase in spending which goes up by a  bit more than the GDP deflator, their chosen measure of inflation. They confess that the real increase might have to be small, given the financial problems the state faces.

         Their critics say this means massive cuts. They argue that health inflation will continue to be faster than general inflation. It is true it has been in recent years, because there have been some large pay awards  which have favoured public sector workers more than private sector ones, leading to a relative increase in the cost of providing public services. There has also been an inflation in the costs of equipment and range of treatments which the NHS can offer. Productivity in the NHS has not gone up. There is also an argument that as more people live longer, so in  their final months they need more treatment because they are older and frailer than their predeccessors.

        The government has three responses to this argument. They can point out that the big relative increases in public sector pay have now been achieved. Two years of pay freeze should mean health costs rise less rapidly than general inflation. There is also a strong feeling in government circles that the NHS, like the rest of the government sector, can buy things much more cheaply than in the past, by applying better management techniques to purchasing.

        They can argue that the NHS has had a very poor productivity record in recent years. It should be possible to catch up some of the lost ground compared to the private sector, where productivity has powered ahead. That is why the Health Secretary wishes to harness more private clinics, not for profits and other health providers to offer treatment free at the point of use for the NHS, to get better value and higher quality.

          The government can also claim that whilst the very elderly do indeed impose more strains on the NHS, younger people who take care of themselves with good diets and exercise, are now demanding  much less of the service. Also under Labour more people effectively privatised themselves, going to private clinics to get things done which they found were subject to delay or difficulty in the NHS.

         If you put all these claims on both sides of the argument together, I come up with the view that if the NHS does raise its management game as the government wishes it can handle the budgets. If it carries on being run as in the last decade, it will be very short of cash. As Mr Blair used rightly to say, you need reform to go alongside more finance, to make it work.

       There is nothing new about these arguments. When I first entered the public sector as a County Councillor I was amazed at the extraordinary way the finances of a large public body were organised. It seemed designed to prevent sensible controls being placed on spending.

           I joined the Finance Committee. I was working as a finance professional  in my main job. I found the very long papers we were sent for each meeting also impossible to understand. They  used all sorts of funny numbers to prevent you working out how much cash was being spent. They changed the year base for the budgets, they used inflation adjusted numbers without explaining properly how the inflation adjustment was judged, or where the future forecasts of inflation came from. They assumed that once an item had made it into a budget it would be rolled forward and augmented every year as an inescapable commitment. Figures were in “real terms” rather than cash.

              Each year’s budget was an exercise in officer lobbying for more spending. Instead of showing you what was being spent and leaving you to decide what to delete and what to increase, they added all sorts of figures into the previous year’s budget to give you a “New base budget” for the following year. This added in sums for inflation, for “unavoidable commitments”, for “new functions required by Statute”, for “consequences of past decisions”, for “responsibility and age related pay allowances”, for “pension commitments” and the rest. By the time they has finished they normally reckoned that anything less than say a 7% increase would require “cuts”, as you were invited to assume the adjusted budget and then apply the knife at your peril if you were someone who clearly did not understand the remorseless arithmetic of more public spending. If you insisted on a lower budget they would then oblige with the parade of bleeding stumps, offering up a list of cuts that no sane person let alone a politician could possibly approve.

          I asked for  shorter cash budgets, with clear figures for the main spending heads so we could have an informed debate over what worked, what needed improving, and what could be removed. The officers called that “zero base budgets”, because we refused to accept that anything in the previous year’s budget automatically qualified for the following year. We also wanted to analyse all the so called unavoidable commitments, as these were often judgements or concealed “growth items” which otherwise appeared as a smaller different list for Councillor decision.

            All these old tricks are still be played by public sector managers. No-one runs a successful private sector outfit like that. You need transparency over the spending. You need to strive to cut costs and do things better. Too many public sector bugets are compiled on the basis that more spending, more inputs are always good, and all cuts damage services. We need Ministers and Councillors prepared to challenge this nonsense, and aim to get better value for every public pound spent. As public spending is rising in cash terms there need not be any damaging real terms cuts in valued services. If there are, it is bad management. This year total cash spending goes up another 3.8% according to the Tresury figures. With a pay freeze at the same time, this increase should more than cover public sector inflation.




  1. lifelogic
    October 10, 2011

    ” As Mr Blair used rightly to say, you need reform to go alongside more finance, to make it work.”

    A shame he did not actually start any of the reforms needed.

    The NHS is hugely inefficient – you describe beautifully the absurd budget negotiation tricks above. The people running it are clearly not on the side of running efficiently, they are playing games to increase budgets. They are not providing effective solutions for patients, which should be their job, but are acting in the interest of the staff and an ever larger budget.

    We need efficient “factories” for certain operations Knee/Hip and similar. There is no need for many things to be done by doctors or even nurses at all. We need to think in terms of the Adam Smith and the manufacture of a pin.

    We also really need to get rid of free at the point of use and make some charges to all, but the tiny few who really cannot afford them even then perhaps a loan. You need customers to pay and to comment and complain when they are not served and take action on these complaints.

    Finally a system like air crash investigations that tries to prevent accidents by open reporting or incidents and positive action.

    I would also introduce a set scale no blame compensation scheme for negligence and get rid of the lawyers. Rather than inflicting endless litigation on people when things go wrong. To be treated they would have to agree to this set compensation scheme. Just as people do when flying.

    You should encourage more to go privately with tax relief or part payment for those that do. So as to save money in the NHS system overall.

    1. A different Simon
      October 10, 2011

      As you say we’ve got to try and stop taxpayers from being ripped off by the ambulance chasers .

      A fixed scale of compensation which forms one of the terms of consent is a great idea .
      Might not be possible to apply it to emergency treatment but that doesn’t mean it isn’t worth applying to other stuff .

      Can’t agree with you about replacing Dr’s and Nurses . I want myself and others to be treated by properly qualified personnel .

      Not sure if I agree about removing “free at the point of use” .

      Lastly , I would like health policy to be formed by people who have first hand experience of illness ; inclusing MP’s who have faced serious illness .

      There is nothing worse to hearing prescriptions “for others” from those who have enjoyed good health themselves .

      1. lifelogic
        October 10, 2011

        Some things do need doctors and nurses but many do not. You could be trained very well but just to do a specific operations say cataract and might well do it better than many doctors – there is not need for a full doctors training just to do this. The Medical profession need taking on sometimes. Is is like saying you have to study every aspect of cars their engines, electronics, tires, fuels, paint systems, welding, glass production, material science and all the rest before you can change a windscreen wiper or a light bulb.

        1. A different Simon
          October 10, 2011

          Not sure about your analogy .

          For sure people who specialise in particular tasks do it better than other people . I’ve noticed this as a patient in hospital when it comes to phlebotomists taking blood and some junior doctors trying to . Except when staff are short on the ground for instance during holidays a doctor should probably not be taking blood themselves .

          This is a matter of letting other people get on with their jobs . I’m sure our medics can delegate too .

          The crunch point comes when something goes wrong as it innevitably will due to differences between patients as much as differences between operators and operator error . When that happens you need good nurses and doctors .

          A properly educated optician may well detect a problem which leads them to refer someone to a cardiologist .

          For what it’s worth car mechanics are dealing with peoples lives too and one mistake can send someone to the graveyard .

          I don’t believe having expertise on hand adds an unnacceptable cost . You can’t have an “expert systems” computer program telling someone what to do next when you are dealing with peoples lives .

          NHS could drastically reduce it’s bills for medicine and everything because it’s got more buying power than any other organisation on the planet except perhaps the US millitary .

          If the public purse refused to pay more than double the going rate for most procurement the savings would be huge .

          1. lifelogic
            October 11, 2011

            You say “I’m sure our medics can delegate too” yes but are they always allowed or encouraged to – by the systems and powers in place?

    2. uanime5
      October 10, 2011

      Adam’s Smith’s methods worked in manufacturing a pin because the raw materials were always the same, so it was viable to have workers who were trained to only perform one part of the production process. This will be less successful in hospitals because all patients are different, so they will require a variety of treatments.

      One problem with specialisation is that it can lead to people shortages in areas that are considered difficult. This is currently occurring in many schools as it is more difficult to get teacher for ‘hard’ subjects such as science and maths. Given how many years a person has to train to become a doctor careful monitoring will be required to ensure that shortages do not occur.

      Why should people be charged to use what they pay for with their taxes? People are capable of complaining of poor quality service even when they don’t pay for things.

      Unsure how effective the investigations would be. If it’s for preventing MRSA spreading, reducing hospital negligence, or identifying serial killers then it would be effective. Though it’s less effective for patients who suffer from complications during surgery as this is often an unavoidable risk.

      No blame compensation can work if the hospital is willing to admit that they were at fault. However if as a result of negligence a person will need care for the rest of their life hospitals tend to use litigation to avoid paying the high costs of care. There’s also the problem of Gross Negligence Manslaughter, where doctors can be jailed for excessive negligence, which can result in doctors denying responsibility for a death.

      1. A different Simon
        October 10, 2011

        Sounds like you have experience in this field Uanime5 ,

        Obviously , if we claim to be a civilised society , where continual care is required it has to be provided .

        Apportioning blame due to gross negligence needs to be done but provision of care is completely separate and I don’t think a hospital should have to worry about this .

        I feel that the NHS ends up being tasked with things for which it was not designed .

        For instance the care of the elderley IMHO is a problem which requires a solution all of it’s own . Dumping an elderley person on the NHS because there are not enough properly qualified old persons homes is not a proper the answer .

        1. uanime5
          October 11, 2011

          I have some knowledge of hospital procedures and have studied law. I also have read a variety of articles in Reader’s Digest, some of which were written by doctors.

    3. forthurst
      October 10, 2011

      You clearly underestimate the ability of some senior registrars to organise their departments efficiently. I do not believe that hospital practice can be divided sensibly into bespoken and sweatshop operations. Surgeons should be skilled in all aspects of their work. I believe they do tend to run specific clinics for different aspects of their work; the operating team for an emergency admission of a road accident is going to be very different from that of an elective knee replacement and they are very likely to be performed in different theatres under different surgeons.

    4. Bazman
      October 10, 2011

      What will be charged for and who will pay? This is the basic question that you cannot answer. A loan? Are you serious.
      The problem is that when this factory fantasy goes wrong then and it will, it will be the taxpayer who picks up the tab for corrective surgery or long term care. The human body is not a biological machine as yet another one of your simplistic fantasies implies. A an 80 year woman in poor health would not be the same fish as a fit 18 year old teenage boy.

    5. uanime5
      October 11, 2011

      I remember once reading about a system in France they used to cut the waiting times for orthopaedic surgery. Basically they would anaesthetise one patient while another was having surgery, so when the doctor finished one operation they could quickly start on the next patient as opposed to finishing the operation then anaesthetising the next patient.

      Though doctors were paid per patient as so they wouldn’t object to having an increased workload.

  2. norman
    October 10, 2011

    Unfortunately this government let both barrels off into both feet when they declared that they’d match Labour’s spending pound for pound, thus cementing the accepted knowledge that more cash always equals better services, caring government, etc. They can now say it was simply opportunism, that they’d say anything to get elected however ludicrous and that they don’t really think that but then how do we know they’re not lying now?

    Cameron, in straitened times when he could have done another u-turn but in truth probably too late anyway, then compounded this by ringfencing certain pet projects, NHS, foreign aid, EU, and telling us that he would increase spending on these (dramatically in the case of foreign aid and the EU) as these were ‘caring’ public services that couldn’t possibly survive with less cash that Labour had stuffed into them.

    1. Electro-Kevin
      October 10, 2011

      Foreign Aid: Using our money to detoxify the Tory brand.

      Almost as bad as bribing unemployable criminals with our own money not to rob us.

  3. Mike Stallard
    October 10, 2011

    All I know of the NHS is that my wife had her life saved without drama and with efficiency, sometimes bordering on kindness. Our flu jab went off very well and politely on Saturday and they seem to look after me with efficiency and humour and, yes, generosity when necessary – and I make that as infrequently as possible. I have often gone in expecting the worst and come out surprised and pleased.

    That said, the bureaucratic cancer that is – has – taken over our national life is a real menace because, speaking, as you describe, in Newspeak, it is beginning to get really expensive. Even worse, it makes assumptions that I, as a Catholic, cannot possible agree with.

    May I recommend radical surgery?


  4. Brian Tomkinson
    October 10, 2011

    No chance of this government making any impression on this waste of taxpayers’ money and sloppy accounting. They are active participants. Daily they “find” money which will not be spent from some unidentified budget and spend it on something else. I thought they wanted to reduce the deficit – it doesn’t seem much like it the way they behave. Contrary to what Cameron and Osborne said last week they are not paying off the debt they are adding to it by at least 50% over this parliament. John Major reminded us yesterday that government debt in 1997 was £300billion; by the time Labour left office it was more than £900billion and it will be £1500billion when the coalition seek re-election. Do they really think they have the remotest hope of securing our votes after planning and presiding over such a failure to deal with the country’s financial problems?

  5. Richard
    October 10, 2011

    The NHS is more than a state run service, its verging now on a sacred quasi religeous organisation.
    Untouchable, with the public frightened of any alternative and powerful unions backed by the media continually putting forward the argument that nothing must change, other than the relentless increase in the amount of money given to it each year.

    Re-organisation is the best that can dare be tried by Governments and there have been many attempted over the years and most have been rebuffed by the vested interests within the NHS and achieved little.
    Like trying to improve education, fighting against fixed attitudes and the entrenched opinions in the NHS is so diffcult its best to move towards an alternative new system and hope the public eventually see that its quite nice after all.

    Make private health insurance cover a compulsory part of employment requirements for everyone and make it tax deductable for both individuals and companies.
    Those who cannot afford insurance would be covered by a state sytem.

    The state would help and promote the funding and building of private hospitals just like the way we are now funding free schools and soon there would be private hospitals for everyone.
    Once people had experienced the service offered, their feelings about the NHS would change.

    I love the mantra “free at the point of use” which should have a further line added just for information:-

    “yeah but…actually costing you £3000 each per year in tax

    1. uanime5
      October 10, 2011

      What happens when people don’t want to pay for private health insurance and want to continue using the NHS?

      Why should the state build private hospitals? Shouldn’t the private sector be building their own hospitals?

      1. Richard
        October 10, 2011

        On the first item you raise -They wouldn’t have to have insurance if they didn’t want to, just as you dont have to send your children to a good local new free school or new local acadamy if you dont want to.
        Perhaps it would end up cheaper and better for everyone-who knows?
        I think its called personal choice, something that state run NHS (and education ) isn’t currently able to provide its customers.

        On the second item you raise- I dont think youve read what Ive said:-
        “help and promote the funding” doesnt mean pay for.
        I too would expect the private sector to pay for insurance backed hospitals.

    2. lifelogic
      October 10, 2011

      You say –

      I love the mantra “free at the point of use” which should have a further line added just for information:-
      “yeah but…actually costing you £3000 each per year in tax.

      More to the point it inevitably results in back door rationing at the point of use. Done by intentionally caused delays between appointments inconvenience and huge waiting list at the point of delivery. Each hospital often has every incentive to deter use of their services in the hope they go elsewhere as does the GP (sorry nothing today could you ring back tomorrow between 9-10, when we are always engaged, being a favourite GP rationing trick).

  6. alan jutson
    October 10, 2011


    Your description of year on year budget proposals sums up the Public sector thought process perfectly.

    Put many of them in the Privare sector, and they would really struggle until they came to see that budget setting is all about comonsense.

    You start with Zero,then move forward.

  7. lifelogic
    October 10, 2011

    Why are there cuts when total spending carries on rising?

    Because like most of the state sector it is run for the benefit of the senior employees and senor managers. The name of the game is to extract the maximum budget from the treasury while delivering the minimum in services (that you can get away with). That way you have the maximum sum to divide up between the managers.

    1. APL
      October 10, 2011

      lifelogic: “Because like most of the state sector it is run for the benefit of the senior employees and senor managers.”

      Who oddly it appears, seem to be paying themselves salaries beyond the dreams of Croesus!

      1. lifelogic
        October 11, 2011

        Indeed I once had a slightly dopey girl working for my company who left, to my great relief, to work for the NHS in admin she was paid nearly double plus a better pension.

        1. Bazman
          October 11, 2011

          She had a strike for better wages your company could understand. Who does she think she is!?

  8. Robert K
    October 10, 2011

    In 1961, Murray Rothbard of the Austrian school of economics, wrote this, which sums it up for me:
    “In the private sector, a firm’s productivity is gauged by how much the consumers voluntarily spend on its product. But in the public sector, the government’s “productivity” is measured — mirabile dictu — by how much it spends! Early in their construction of national-product statistics, the statisticians were confronted with the fact that the government, unique among individuals and firms, could not have its activities gauged by the voluntary payments of the public — because there were little or none of such payments. Assuming, without any proof, that government must be as productive as anything else, they then settled upon its expenditures as a gauge of its productivity. In this way, not only are government expenditures just as useful as private, but all the government need to do in order to increase its “productivity” is to add a large chunk to its bureaucracy. Hire more bureaucrats, and see the productivity of the public sector rise! Here, indeed, is an easy and happy form of social magic for our bemused citizens.”
    You can read a fuller version of thison the Mises Institute website. The article was excerpted from Economic Controversies, chapter 21, “The Fallacy of the ‘Public Sector'” (2011). It was originally in the New Individualist Review (Summer, 1961): 3–7.

  9. English Pensioner
    October 10, 2011

    The other trick is to grossly “under estimate” the cost of a new project in order to get approval., usually with the connivance of the selected contractor. The project starts, and the officials know that they will in due course be able to get more money as it is very rare for a politician to cancel a project on which money has already been spent for fear of getting the blame for the “waste”.
    In industry, those concerned would be fired for their failure to have planned the project correctly, and the contractor would know he’d never get another contract. 5-10% over-run maybe, but with state run projects at most levels it is usually several hundred percent over-run, particularly if computers are involved. But no-one gets fired.

    1. lifelogic
      October 10, 2011

      Indeed basically the people paid to manage it are acting against the interest of the people trying to control budgets and against the interest of the public too.

      If you spent tax payer’s money on some thing for some one else what do you care about how well it is spent unless it is on you wage or bonus. Indeed if you spend it badly you might get some more just to sort the mess out.

    2. A different Simon
      October 10, 2011

      I.T. projects typically overrun by over 100% in the private sector too .

      This is as much as anything due to the intangible nature and unique challenges presented by software . It can’t be specified to the same degree as a bridge .

      15-20 years ago there was sufficient availability of design expertise required to make huge data intensive projects like computerisation of NHS records a success .

      Now I don’t think there is .

      Take the database management systems arena . The major players killed off the competition 15 years ago and real progress has been stifled and has indeed been going backwards .

      Database design practitioners who are forced to use database management system vendors products are typically spoon-fed by the vendors themselves .

      They do not have the knowledge of the fundamentals of the field to appreciate the problems with these products or demand anything better so the situation is unlikely to change .

      I’ve worked in software development all my life and would never invest in a software company . I do however invest in small oil exploration companies in geopolitically unstable areas – because the risk is lower .

  10. Iain Gill
    October 10, 2011

    I see Cameron is trying to make himself sound tough on immigration while leaving the floodgates wide open, neatly avoiding the issue of ICT visas and the floods of Indian workers in the coutry on them, neatly avoiding the tax and national insurance concessions which allow foreign work visa olders to undercut Brits in the workforce

    I see Vince is loudly spouting the exact brief from his mates at the top of the Indian outsourcing companies, ie the UK workforce is useless therefore we must allow in more swarms of Indian nationals and so on

    This place looks less and less like a democracy everyday

    1. alan jutson
      October 10, 2011


      Shows and absolute disregard for us being able to train our own people for such jobs as well.

      Thought they were wanting to encourage apprenticeships, or is that just for the burger flipper type job descriptions.

      Not that there is anything wrong with burger flippin, its a huge and profitable industry, but I thought we were trying to encourage manufacturing and industry type skills.

      1. A different Simon
        October 10, 2011

        Not much point studying computer science .

        Even if you do get regular work at the end of it it will likely take 12 years to reach the starting package of a police constable – by which time the policemans remuneration will be completely out of site and they will be over a third of the way towards retirement .

        Not a career with a future in the UK .

        1. Iain Gill
          October 10, 2011

          it would be if the (foreign-ed) outsourcers were (removed where illegal-ed), if we stopped giving them uncapped visas, if we made them pay the same tax as a british company and british workers, if we prosecuted them for IP theft, etc etc etc

    2. sm
      October 10, 2011

      JR mentions increases in Real Spending as per GDP deflator.
      What is real inflation in the medical sector?
      Why do we have such a low supply of Doctors and Nurses such that we need to attract overseas candidates?. Can we not train more? Potentially more supply would reduce labour wage demands. Should there be more than one qualifying body in the UK for Doctors.

      What is the truth to the claim our NHS is an International Health Service?

      What is the increase in demand due to
      1) age (assuming on average older people require more spend).
      2) or increased immigration, (assuming more people=more spend).
      3) or an increase in birth rates of newcomers

      (note also demands for maternity services and schools etc)

      Good management and less waste is good but that also applies to Government Macro policies.

      1. uanime5
        October 10, 2011

        We attract overseas doctors and nurses because it’s cheaper than training people and they are often willing to work for less money.

        1. Electro-Kevin
          October 10, 2011

          Wrong. Because our own trained staff go abroad.

        2. A different Simon
          October 10, 2011

          I presume that another reason that the medical profession willingly trains people from abroad is so that they can return to their country and improve healthcare there .

          If so this is great . I’m all for co-operation and am aware that many of our doctors go to other countries such as the US to further their expertise .

          The overall remuneration for nurses has improved although the proportion which is deferred to pension disadvantages them when it comes to buying homes – I see the solution being to provide a pensions scheme where everybody is compelled to save for old age .

          Nurses don’t just do it for the money . Would increasing remuneration a bit more encourage people with the right aptitude and ethics to enter nursing or would it encourage people who are not suited to it ?

      2. Mark
        October 10, 2011

        See my later post for answers to some of your questions. So far as staffing of the NHS is concerned, I found some interesting statistics here:


        (there is a spreadsheet version also available from this page:


        The first striking facts relating to the NHS just in England (Table 1a) are that overall employment has increased from 1,098,348 in 1999 to 1,431,996 in 2009 – an increase of over 30%, while the number of doctors of all types has increased from 94,953 to 140,897 – over 48%. Some of this is undoubtedly due to the effects of the EU Working Time Directive. Surprisingly, both 2006 and 2007 saw small reductions in overall staff numbers. Over the decade,
        employment of nurses was up 27%,
        qualified scientific technical and therapeutic staff up 46%,
        support to clinical staff up 27%,
        NHS infrastructure support up 38%,
        and GP practice staff up just 7% serving 30% more GPs (is this a sign of efficiency when responsible for your own budget?).

        Table 4 reveals that in 1999, just under 25% of hospital doctors (HCHS in the jargon) were trained outside the UK and EEA. The proportion peaked at 32% in 2005 and 2006, and has fallen slightly despite rising overall numbers to 29%.

        Looking at HESA statistics here:


        you can see that in the UK there were just over 29,000 undergraduates studying medicine and dentistry in 1999, which had risen to 45,000 in 2009, with 9,900 starting their courses. Assuming a 40 year career, present levels should support a staff of 400,000, while even the lower levels of 1999 would support perhaps 250,000. The truth is that many of our medical graduates emigrate: it can’t all be about pay. I suspect many are simply frustrated by the inefficient NHS and prefer a better employer. Some of it is doubtless caused by the moves by the NHS to be a diversity employer – see all the tables giving gender and ethnicity splits in the first link above. The consequence is that we have been importing staff to replace them.

    3. Tim
      October 10, 2011

      I noticed Mr Cameron made absolutely no mention of the largest source of immigration……..student visas. A huge scam for bogus courses where the numbers are staggering (300,000 and rising). Why not just stop the issue of these visas until such time as they are satisfied that it is a genuine educational establishment of at least degree standing AND they can support themselves whilst they are here?
      I’m afraid after 18 months Mr Redwood that this Coalition is starting to show that all its policy statements from public spending, EU budget and relations, Human Rights Act, ridiculous foreign aid budget (when we can’t equip our own aircraft carriers) and Immigration are frankly all hot air.

      1. APL
        October 10, 2011

        Tim: ” .. are frankly all hot air.”

        But Tim, you gotta give them 10/10 for consistency.

  11. John B
    October 10, 2011

    Sell the hospitals – buildings, land, equipment, good will = influx of all the money sloshing around the World looking for a safe haven, to release hundreds of billions fossilised in national assets, and pay down some of the debt.

    Privatisation of health provision = payroll expense off the national current account, thus immediate reduction in the budget deficit.

    Privatisation = user/payer has choice in provider and this is in direct control. Doctors, hospitals, nurses – no patients; no job; no money. Shape up and provide a proper service or get a job picking fruit/sweeping streets.

    Privatising = more jobs, as profit-related patient procedures go up to meet demand, requiring more staff, more external services and goods.

    Why is the Conservative Party wedded to the NHS, a Stalin-era bit of discredited, unworkable Socialist clap-trap?

    1. norman
      October 10, 2011

      There may be no truth to this but I was reading a piece by an American about the proposed ‘Obamacare’ health regulation and he brought up the subject of the NHS and Margaret Thatcher. He claimed that Mrs Thatcher thought the NHS was the single item holding the UK back from breaking free of socialism and it was a big regret that she was unable to do anything about.

      The NHS and the much lauded ‘free at the point of access’ (unless you pay any tax) has become the opium / religion of the UK masses and for any politician to suggest we go cold turkey and break that monopoly is nigh on impossible.

      In brief, it’s not the Conservative Party that is wedded to the NHS, it’s us.

    2. uanime5
      October 10, 2011

      What you’re proposing is what they have in the USA. The main problem is that if you can’t afford the medical treatment there’s no one to help you (unlike the NHS where you don’t have to pay the cost of your treatment), treatments are expensive to maximise profits (unlike the NHS), and it’s more expensive overall because people wait until minor illnesses become an emergency as the emergency ward can’t refuse to treat people (unlike the NHS where treatment is more prompt).

      1. Bazman
        October 10, 2011

        The NHS is one of the few levellers in this country and also a very large employer of many different people.
        Third world healthcare for most on top of the other inequalities in this country will not be tolerated by the population and quite rightly so.

        1. APL
          October 11, 2011

          Bazman: “The NHS is one of the few levellers in this country ”

          When the whole country is reduced to rubble, I hope you will be happy with the equality you have so sought.

  12. stred
    October 10, 2011

    Building costs are increasing far more than general infation, owing to regulation and inflexible application by functionaries. Equipment costs are higher because of the commodity price bubble and devauation. This is likely to increase because of the latest the money printing on top of the currently high rate of general inflation. The NHS is trapped in many PFI contracts. Current spending is bound to be cut.

    We certainly cannot afford to offer generous redundancy packages to already highly paid managers who transfer to the new GP lead trusts.

    Interesting points about how government measures its own productivity. More functionaries producing more regulations and interpreting them on ever more expensive private projects. Productivity is increased but the nation is left with less for more.

  13. Anne Palmer
    October 10, 2011

    This Government is cutting down on the NHS, as far as I can see, for two reasons.

    They need the money for other things like the extra layer of Governance which we have never had before, the dividing of ENGLAND into EU Regions with elected Mayors, full Cabinets and all that goes with that extra layer. Money also needed for the many referenda that come with that-plenty of money for those, but not enough for the referendum on the EU which many people want.

    Our National Heath Service that developed here in the UK after the Second World War may be gone forever (if we do not fight for it to remain) and there may never be a public discussion about this but it may disappear without anyone realising it

    Welfare is perhaps the last bastion of nationalism, but it is one nationalism that the vast majority of people will most definitely want to keep, it poses however, a problem for the European Union, for how can the Union, that is dedicated to the removal of national borders allow our welfare state to remain as it is when other member state’s welfare systems are not all free at the point of delivery? Are WE the odd one out, yet again?

    There has always been Private Health care for those that could pay for it or prefer the privacy provided by private care. It is usually paid for through private insurance. NHS services on the other hand are “free at the point of delivery” paid for by our taxes. When the NHS was launched in 1948 it had a budget of £437million (roughly £9billion at today’s value). In 2008/9 it received over 10 times that amount (more than £100billion). It employs over 1 million people and is reputed to be the largest employer in Europe if not the world, depending on who is the teller! We, the people, by way of our taxes, employ them all.

    The Times (In 2003), which reported that if we join the Euro, the European Central Bank had warned Britain it might have to give up its National Health Service. Even the Bolton Evening News, May 2003 reported that, “Britain would be forced to scrap the NHS if we joined the euro, so warns the ECB, saying free health care could be slashed to just emergency services”.

    Also, “The ECB recommends jettisoning the NHS in favour of private health care, saying Britain’s aging population will send NHS costs soaring, and euro-zone rules would not allow Gordon Brown to borrow necessary funds to foot the bill”. Does Britain have an aging population more so than any other country?

    Now how much do we pay the EU each and every year and on top of that all the extra EU Agencies we contribute to? Then add up all the wages and vast expenses we pay to our own elected MP’s that can only obey EU orders like the rest of us.
    Sorry about this John, but what would the people like most of all? Paying the NHS or paying a Government that cannot Govern this Country according to its Common law Constitution? But then! The people have never been asked, have they?

    1. alan jutson
      October 10, 2011


      “Our National Health Service that developed here after the Second World War my be gone forever”

      It already has, it now offers a far, far greater range of services than ever it was proposed to do back in is early years.
      With the advancement of medical science, many more illnesses are treated with expensive life saving drugs, lives are prolonged, people are kept alive on life support machines where they would have once have died.

      The real argument that needs to be discussed is how it should develop from now.
      Should we be keeping people alive who have little quality of life expectation, should we really be completing cosmetic surgery for free, should we really be treating grossly overweight people with gastric band surgery for free, should we treat habitual drug addicts for free, should we treat drunks for free, should we treat car accident victims for free (is that not what car insurance is for) should we treat extreme sports injuries for free, should we impose a cost limit of treatment, should we impose a cost limit per age.

      No, I am certainly not suggesting that all of these things should be withdrawn, or that people should play at being God, but certainly some, if not all of the above needs to be discussed in a sensible manner, and decisions made, otherwise the health budget will take all of our taxation income, such will be the future demand, and the ever increasing rising cost of drugs and expensive equipment.

      I certainly think we have now come to a time where all basic needs and treatment should be provided for free, but additional treatment to perhaps have some sort of limit, which can then be perhaps topped up further with a larger (or private) insurance contribution, that however will leave any party that suggests such, being labeled as abandoning the sick, and of us having a two tier health service.

      Clearly we cannot forever keep on spending more and more taxpayers money, with no restraint or limit whatsoever on either treatment type or cost.

      1. Tedgo
        October 10, 2011

        I agree with what you say particularly with car and sport injuries.

        As to drugs I think the big pharmaceutical companies are milking health services around the world. The companies suggest that it cost billions to develop some drugs, it hard to believe, after all a billion pounds represents 15,000 man/women years of work.

        Many drugs are developed in University laboratories by small teams.

        I think we should limit patents on drugs to perhaps only 3 years.

    2. stred
      October 10, 2011

      Brilliant post Anne/ Phone me if you are Johns sister.

  14. Tedgo
    October 10, 2011

    To my mind the NHS should essentially consist of two groups, the GP practices and service providers like hospitals. All the other existing authorities are simply parasites.

    The GP practices are in the best position to control costs. When a doctor puts a patient on a course of drugs or sends them to a hospital, for an operation, the GP practices remaining budget is effectively reduced by the appropriate amount immediately. This could easily be monitored by a simple computer program within the practice and would give weekly and monthly reports as to how costs versus budgets were performing.

    As to hospitals, the Government issues a standard price list for procedures which the hospitals are duty bound to observe. The hospitals cost control procedures should focus on achieving that price list. The only contract the hospital has is that it exists to carry out NHS procedures.

    Each GP’s practice would need a hand full of buying clerks and a couple of accounts clerks. When a patient needs an operation the buyer contacts the local hospitals to confirm the prices and more importantly when the operation can be done. With the doctor and patient’s agreement the buyer then places the order. Later the accounts clerks process the invoices from the hospital.

    The NHS would need a small administration to fix the price lists and authorise hospitals and GP practices etc.

    I simply do not see the need for Commissioning Consortia at all.

    1. uanime5
      October 10, 2011

      Why not have hospitals control the budgets instead of GPs? It would be far more efficient for 1 hospital to calculate how much it spends on each patient, than have hundreds of GPs calculate how much they should spend on each patient. You’d also need fewer accountants and wouldn’t need buying clerks.

      1. Tedgo
        October 10, 2011

        Patients are linked to the NHS through their GP so your suggestion would not work.

        I live in Andover and we are served by four general hospitals (if you add in Southampton General then its 5). People who live in the east of Andover would probably prefer to use Basingstoke, while we tend to go to Winchester. If you need dental surgery then one goes to Salisbury.

        There are other service providers, other than hospitals, and my proposal would not prevent the GP sending a patient to a private facility, if they could match the NHS price.

    2. Iain Gill
      October 10, 2011

      ok if you have an ok gp

      for those with the bottom quartile gps this will not work

      in fact proper patient choice of gp is one of the things that still needs fixing (been promised many happen in practise)

      the only people who can be trusted with choice of care provider is the PATIENTS

      give the patients the buying power and watch the dirt in the waiting rooms disappear, the waits disappear, the bad attitude, and so on

      it is lack of buying power with the patients that is the biggest problem with the nhs giving power to the GP will not fix anything

    3. stred
      October 10, 2011

      The french system also seems to avoid all the non hospital managers. Does anyone living in France know if this is true?

  15. NickW
    October 10, 2011

    Formulate a standardised accounting system across the whole of the public service, which is transparent and which is suited to cost reduction and increased efficiency. Impose it by law.

    We have all seen the complete nonsense when the public service approaches the end of the financial year, and managers circulate letters looking for suggestions as to how the surplus funds can be spent so that they can be retained in next year’s budget.

    Link budgeting officer’s performance pay to cost reduction AND maintenance of service standards, and stick to it.

  16. Mark
    October 10, 2011

    I continue to be mystified that there appears to be no technological improvement in healthcare costs. As far as I know, techniques have improved, so that keyhole surgery which is much less invasive leads to shorter periods of hospitalisation. X-rays are now mainly digital, cutting a massive recurring spend on film and development.

    The demographic factors that are often cited as leading to a higher cost profile don’t bear close examination. In fact, we have a small population cohort of elderly at the moment because of the lower birth rates in the Depression years and the effects of WWII: it will be only when the post War generation – now just reaching retirement age – become elderly that demand will increase more markedly. Deaths (and expensive terminal care) have been falling over the past decade because of this. Demand is being driven more by paediatric need on the back of immigration and high birth rates among immigrants. I know I presented calculations here that used ONS population data and some average age cohort related cost data that showed that real demand would grow by about 1% p.a. over the Parliament. If we got a control over immigration, even that might not be reached.

    This study:


    illustrates the point about population structure – although since it is a decade old, it underestimates the effect of immigration.

    If I had to guess, NHS costs have been inflated by a) expensive, badly negotiated PFI deals; b) poor management and belief that more managers equals more output; c) poor negotiation with suppliers; d) expensive tick-box regulatory compliance on diversity etc.; e) “Pilgrims”.

    1. stred
      October 10, 2011

      You should be made minister for health for this post.

  17. Martyn
    October 10, 2011

    Some of our revered politicians have a wonderfully way with words to encourage we, the common herd, to accept cutbacks in public services at the local level. Here in Oxfordshire, for example, the spokesman for the County Council recently announced that all those who successfully campaigned to keep libraries open were “a bunch of ‘luvvies’ and ‘well-known Oxford Lefties” and that saving libraries would mean services for the elderly and disabled will have to be cut. So in my part of the UK the reponse by politicians on being confronted with the rebellious public is to denigrate the voters who planned and managed a campaign to save their library and, at the same time threaten them with being responsible for withdrawing services from the elderly and disabled. Since much of Oxfordshire is largely conservative in nature, with both a big and little C and it was because of their votes he holds office, it must be that he holds us in contempt and hates the idea of the people having any say in Council decisions. Rather like the way the EU functions, of course……

  18. Bob
    October 10, 2011

    Free IVF on demand should be discontinued.
    If you can’t afford to pay for it yourself, you can’t afford to have children.

    Voluntary Disfigurement
    Anyone providing tattoos or body piercings should carry compulsory insurance to deal with any remedial actions or removals that may be subsequently required. The customer would be given a reference number for the job, linked to their NI number. Then the customer could go to any hospital public or private to have the necessary treatment and the insurer pays the bill.

    1. Winston Smith
      October 10, 2011

      Its not free for all regions, depends on the PCT. Some offer no IVF treatment, some will offer up to 3 bouts. My colleague came to the UK 3yrs ago and has just had her 2nd free treatment (avg cost about £5k each time). Her father came here on holiday last year and spent 2 weeks in hospital. They never asked him to pay a penny.

    2. Electro-Kevin
      October 10, 2011

      Vountary disfigurement: if this is on the hands or above collar and renders the person unemployable then benefits should be limited too.

      Some of this disfigurement is done to deliberately shock or intimidate people.

      1. Bazman
        October 10, 2011

        Just for having a tache? Sound a bit harsh!

        1. Electro-Kevin
          October 11, 2011

          Bazman – A tache that extends above the collar and below the cuffs would render the patient eligible for free treatment with the RSPCA, nay ???

  19. Ruth
    October 10, 2011

    You are right that the Public Sector finances are a mess. My local council threatened to close one of the local markets, saying the water bill on the site was was an exorbitant amount of money, and that costs on the other markets were also high. At the time I told my local councillor that these costs couldn’t possibly be right, but he was relying on information from officers who assured him these were right. Lo and behold, once the traders got someone with a little financial nouse to look at the figures, these “costs” evaporated in a puff of smoke. Complete fiction.

    Unfortunately councillors believe officers and don’t investigate, hence the malaise in local government. But these same principles apply across the public sector as a whole, where financial management is largely absent.

  20. REPay
    October 10, 2011

    The Tories used to warn about pouring cash into unreformed public services. The BBC and others now defer to the vested producer interests within those services. Doctors may not always know best though no one dare say so. The NHS is a quasi-religion in the UK and the idea that private businesses may “compete” with it is anathema and stopping saving money. A friend of mine set up a cataract business that doubled the throughput and accuracy for less money than the local NHS trust. The managment team there succumbed to pressure to cancell the contract…the loosers – the taxpayers and the patients. The winners the incumbent doctors…The savage cuts agenda suits the BBC who are milking it for their own predicament.

    Re: your experience with Civil Servants their obfuscation may be a reflection of the fact that they do not want to share information or perhaps falling calibre in general.
    The vaste amount of paper reflects untidy minds and possibky too many people doing too little.

    PS I was a stagere to Herr Bahler some time ago and I wonder if you/our readers might be interested in some of his views…

  21. Bernard Otway
    October 10, 2011

    There are comments above that say firstly,the NHS is a Quasi religious entity and that to criticise it is tantamount to HERESY,also that there is constant propaganda that MORE of everything is GOOD and criticism is BAD or worse a treasonable offence. Over the last weekend I watched two very good films and very germain to arguments that I and others make on this theme and every other one on this site. One was SKIN about APARTHEID in
    South Africa,a true story about a young girl born to White Parents who was as south africa
    calls coloured in appearance,the film tells her life story which was very sad but thankfully uplifting in the end,as I lived there from 1980 till 2008, it was very familiar I and my coloured wife sat there in floods of tears,HOWEVER it showed EXACTLY HOW propaganda works from very early age upwards,in the class at this young girls new school
    surrounded by WHITES, the teachers IN CLASS were INDOCTRINATING young white children of the SUPERIORITY of WHITES and INFERIORITY of the NON WHITES,I can vouch for the inbuilt attitude of people there ,in fact young white kids were taught at school
    that the BOERE beat the BRITISH in that war and they were astounded to be told we won by me with proof,the other film was DAVE with Kevin Kline about the substituting of a US President by a double,in it he starts doing his own thing, by calling in an accountant
    friend to find $650 million savings from govt spending budgets to save a homeless project
    the way it shows him discussing the savings with his cabinet and their civil servants is very instructive,it shows how THICK the servants think their ministers are and how these ministers just take their instructions.He gets his way and his wife’s project is resurrected.
    As I have said before I believe the public service CAN save at least 20% WITHOUT job reduction,BUT tell the civil servants and hangers on that and you get incredulity,I have also in the past given my own personal instances of govt waste ,which must be extrapolated hugely from my examples,this weekend I give another two that happened on Saturday,firstly my wife got THREE yes 3 letters from the orthapedic hospital confirming her operation for mid Nov,each one IDENTICAL so TWO DUPLICATES, each letter of the THREE in a seperate envelope,secondly in our block we have very sensitive smoke alarms
    linked to the local fire station,at about half past seven in the evening the alarm went off,
    we have a central panel in the lobby where the block chairman goes to liase with the fire brigade to let them know if it is a false alarm or not,firstly the fire brigade did not answer
    so could not be told it was false,secondly they were on their way and thirdly when they arrived first one engine arrived and five minutes later a second identical one arrived,I gave a similar example that happened in May 2011,in my three years in this block there have been at least two such instances a month ALL FALSE ALARMS due to the HAIR TRIGGER
    smoke alarms [which the authorities know about] that is at least 72 times since 2008
    AT WHAT COST again EXTRAPOLATE that over the whole UK,and the whole PUBLIC SECTOR.

  22. Electro-Kevin
    October 10, 2011

    There is no worse BBC bias than its approach to the NHS in soaps and dramas.

    1. lifelogic
      October 10, 2011

      It is true I have never seen the endless waiting, incompetent systems, filthy waiting rooms and general contempt for patients that I have sometimes seen in the NHS depicted by the BBC. Nor do we see any hidden camera or investigator staff showing what really goes on so often in the NHS.

      Four times the death rate for emergency abdominal surgery compared to the US system I understand. Always rightly keen to tackle shoddy builders but not so keen to take on these NHS matters and the excess deaths caused very often.

      As far as I can see the NHS only works at all because of a few excellent staff who do their best, despite the incompetent system, they have to work with every day.

      1. sjb
        October 10, 2011

        LL: “Nor do we see any hidden camera or investigator staff showing what really goes on so often in the NHS. ”


      2. Electro-Kevin
        October 10, 2011

        I was thinking more in terms of the always heartless managers and the always thick police. And the endless politically correct dilemmas forming the plots.

        It’s as though they are trying to educate viewers as to the ‘right’ way to think.

        The built in defence of the NHS in BBC programming (I think the original idea for the NHS was a good one) means that any government trying to take control of it already faces opposition from a slick, well established and primed propaganda machine.

  23. Kate
    October 10, 2011

    I appreciate the clarity with which you have explained county-council spending, and the attentive eye it requires; I am economics novice but it all made sense.
    I do wonder if you would have had this ability if you had never worked in the more ruthless private sector. Is there not an argument to incentivise candidates with financial expertise to move into the public sector for new career challenges, rather than just quasi-privatise public institutions. It is plain people working in the public sector will become passive with regard to economic efficiency, but I don’t think this warrants the erosion of public sector services. Instead there needs to be a balance where genuine experts with years of experience are attracted to more philanthropic positions in the later stages of their careers.

  24. forthurst
    October 10, 2011

    As we know, the survival rate from cancer is substantially lower here than on the Continent. Every doctor knows that the earlier a cancer patient is treated, the higher their life expectancy. There is no reason to suppose that patients with other diseases requiring hospital treatment would be any better off. The problem is one of diagnosis which requires a mixture of intelligence and skill; without either, frequent mistakes will be made that cost lives, mistakes by GPs, mistakes by hospital doctors, mistakes by surgeons. We now have a third world health service recruited largely from the third world. This has been by design.

    Under the last government, it transpired that British doctors were no more entitled to training posts here than any others from anywhere else. Under the last government, doctors who were mainly from (overseas-ed) were given enormous pay increases, coupled with a substantial reduction in their responsibilities, thereby increasing their status measured by income whilst at the same time creating further substantial demand for even more (overseas-ed) doctors to provide overnight and weekend cover for GPs. Under the last government, PFI contracts were entered into for the supply of maintained hospitals which transpired to be costing up to ten times what they could be supplied and run for by the public sector.

    I would like to suggest that the last government, set a priority of preferential foreign recruitment of the medical profession whilst at the same offering sweetheart deals to enrich by cheating us.

    When Gove or Cameron says they wish to improve education whilst at the same time blocking any selection on ability, they are simply lying. At one time most doctors in the UK were ex-grammar school pupils; the GMC spent its time dealing with doctors having relationships with patients: now the GMC deals with (overseas doctors-ed) whilst rebuffing attempts to bring to book (0verseas-ed) doctors whose lack of expertise has proven fatal as well as both suspicious and alarming.

    Hospitals should be run by a director who is (properly) medically qualified whose objective would be to maximise output together with an (proper) accountant whose function would be to ensure that costs were held down. All bonuses paid to doctors should be pooled until Christmas and all awards for negligence should be taken out of the pool, with the remainder distributed. (There would be no role for ‘administrators’ who sit in their offices all day reading doorstoppers issued by the DoH.)

  25. Bazman
    October 10, 2011

    This will all end like the dental fiasco. There must be eight dentist in my town all expensive and private. The NHS ones are often poor quality and oversubscribed. Remind me again what I pay my national insurance for?

    1. APL
      October 11, 2011

      Bazman: “Remind me again what I pay my national insurance for?”

      You pay National Insurance for the welfare of the civil service.

      You don’t pay into a fund for your pension. No such National Insurance fund exists.
      You don’t pay into a fund to operate the NHS, no such National Insurance fund exists.

    2. lifelogic
      October 11, 2011

      You pay it into a bottomless hole, for the benefit of administrators. The system does not work, but it seems from your input to this site, that you want yet more of this non working system.

      1. Bazman
        October 11, 2011

        And the dental fiasco?

  26. Fox in sox
    October 10, 2011

    Spiralling health costs are not because of the NHS, they are occurring all around the world, and all health care systems are under pressure as a result.

    You comment on declining productivity, but without discussing what you mean by productivity. In my professional life time GP appointments have shifted from six minutes to twelve minutes. Is this declining productivity, or is it GPs being more patient centered, discussing treatment options fully rather than the old paternalistic approach. Is it that GPs are managing more complex cases that formally were in hospital outpatients?

    The European working time directive and changes in junior doctors training means that a larger team is required to cover the working day. If the EWTD retricts working to 48 hours per week, compared to the ninety odd hours per week of my first hospital job evidence of declining productivity or good clinical care?

    There is still much waste in the NHS, but it is a very complex organisation. Simple solutions such as sacking managers make no sense if doctors and nurses then have to neglect their patients in order to take management roles such as commissioning. Don’t forget that most doctors vote conservative. We are not the enemy.

  27. Julie
    October 10, 2011

    I’m all for cutting waste in the NHS, but can anyone tell me how this is going to be achieved under the proposals for the new Health and Social Care Bill? This is going to allow private companies to be both purchaser and provider for health contracts. To give an example of what I mean, Circle own GP practices and hospitals. They could commission hospital care through their GP practices and provide it through their hospitals. Now, call me cynical, but I think Circle might decide that they’re all jolly fine chaps and deserve a good payment for that. I think we are heading for the equivalent of a rip in the space/time continuum in NHS funding under this new bill and I do not understand why more Tories aren’t against it.

  28. Javelin
    October 11, 2011

    An excellent post.

    Surely private sector auditors need to address the issue and devise standards. The public sector love complying to form filling so once implemented I guess things will improve.

    Is the Government going to improve public sector accounting to bring it in line with the private sector?

  29. Paul
    October 11, 2011

    So we can afford massive increases in foreign aid and the laughable EU budget but we can’t afford to keep our libraries open, our police on the streets or our public services running adequately. How on earth can the Tories just sit back and let Cameron do this. I really wish the British people would wake up and get behind UKIP.

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