1. The NHS is a bottomless pit
Spending on health care has historically grown by about 4 per cent each year in real terms in the UK. This is due to a combination of factors including a growing and ageing population, rising patient expectations and medical and technological advances. Like other nations, we have chosen to pay for this by prioritising investment in our health system from the proceeds of economic growth.
In the decade following the global financial crisis in 2008, the health service faced the most prolonged spending squeeze in its history: between 2009/10 and 2018/19 health spending increased by an average of 1.5 per cent per year in real terms, well below the long-term average. As a result, spending failed to keep up with demand, increasing the pressures on services and leading to staff shortages, rising waiting times for treatment and performance standards being routinely missed, well before the pandemic.
In 2018, the government announced a five-year settlement for some areas of health spending, covering the period from 2019/20 to 2023/24. Under this deal, NHS England’s budget would rise by an average of 3.4 per cent each year in real terms.
As a result of the additional pressures created by the Covid-19 pandemic, a new three-year funding settlement was announced in September 2021 to increase the Department of Health and Social Care’s resource budget (day-to-day spending) by an average of 3.8 per cent each year until 2024/25. Then in November 2022, the government invested a further £3.3 billion for the next two years (2023/24 and 2024/25) to protect the NHS from inflationary pressures. However, high inflation throughout 2022 meant that NHS budgets will now grow by 2.9 per cent in real terms per year, below the historic UK average and the originally planned spending rises.
As public spending on health has increased, it has consumed a larger share of government expenditure. Spending on the NHS now accounts for more than 20 per cent of all public spending (and more than 40 per cent of day-to-day spending on public services), leading to trade-offs with other areas of government spending. However, this should also be seen in the context of the UK’s relatively low tax revenues compared to many other countries.
In 2019, the UK spent 9.9 per cent of its GDP on health, remaining consistently around this level since 20111 . This is slightly above the average for members of the Organisation for Economic Co-operation and Development (OECD) but lower than several comparable nations, including Germany, France and the Netherlands. Evidence also suggests the NHS is relatively efficient (see Myth 2 below).
Compared to other countries, the UK does not spend a particularly high proportion of its national wealth on health care, while a decade of historically low funding increases has left services facing huge pressures and a workforce crisis. Like levels of taxation and public spending more generally, how much is spent on health is a political choice and politicians should be honest with the public about the standards of care they can expect with the levels of funding provided.
- 1As in all countries, the proportion of GDP spent on health care increased during the pandemic, rising to 11.9 per cent in 2021. Levels of spending have not yet stabilised post-pandemic, so more recent comparisons should be treated with caution.
2. The NHS is inefficient
Measuring the productivity of the NHS over time can be difficult, as full data on the volume and quality of the outputs and outcomes the NHS produces are not always available. However, a study by the University of York’s Centre for Health Economics found that NHS productivity increased by 16.5 per cent between 2004/05 and 2016/17 compared to productivity growth of only 6.7 per cent in the economy as a whole. This averaged at a year-on-year growth in productivity of 1.3 per cent.
The NHS is one of the largest and most complex organisations in the world. Yet, evidence indicates that it employs relatively few managers, with one study recently suggesting that managers make up around 2 per cent of the NHS workforce compared to 9.5 per cent of ‘managers, directors and senior officials' in the UK workforce as a whole.
The NHS compares well with other health systems, coming 4th out of 11 systems for efficiency in the Commonwealth Fund analysis. It also compares well on other key indicators of productivity such as the average length of stay in hospital and the proportion of drugs that are prescribed in their (cheaper) generic form instead of the (more expensive) branded version.
There is no doubt that the NHS can do more to improve productivity and reduce unwarranted variation in how services are delivered. For example, Lord Carter of Coles estimated that reducing unwarranted variation in procurement and delivery of hospital care could save around £5 billion each year. The Getting it Right First Time programme has also shown that significant gains can be made by reducing variation in the delivery of clinical services.
At the same time, the NHS is operating in a context of intense pressure on services, with high levels of staff vacancies, growing waiting times for care and very high hospital bed occupancy. These factors combine to reflect a system that is ‘running hot’, with little capacity to focus on improvement and efficiencies. Against this background, the government has doubled the annual efficiency target for the service from 1.1 per cent to 2.2 percent, aiming to deliver an annual saving of £4.75 billion without setting out a plan for achieving this.
As the former Secretary of State for Health and Social Care, Sajid Javid, said recently, the NHS is already one of the more efficient health services in the world, and evidence suggests it is far from being over-managed. While it can, and must, do more to improve productivity, it is hard to see how current efficiency targets can be met.
3. GPs aren't working hard enough to meet demand for appointments
General practice delivered 27.1 million appointments in December 2022, with 18 million of these taking place face to face and 12 million on the same day they were booked. However, demand for appointments is outstripping supply, resulting in frustration for patients, unsustainable workload for staff, and inevitably, unmet need.
The issues around access to appointments in general practice are not new but have intensified in recent months. Over time, demand for appointments has increased, while a combination of an increasingly complex caseload, rising thresholds for referral to other parts of the system and an increasing administrative burden have all contributed to growing pressures. This has been exacerbated by the impact of the Covid-19 pandemic which has increased GP workloads, while the elective backlog means that general practice is being required to manage more complex needs while unable to unlock access to other services.
These pressures are affecting patients’ experience of general practice, with surveys showing a significant decline in patient and public satisfaction with GP services. The most recent GP Patient Survey found that only 56 per cent of respondents reported a good experience of making an appointment, 9 percentage points worse than the 2020 results. Significantly, more than one in four patients said they had avoided making a GP appointment in the past 12 months because they found it too difficult.
Many of the challenges patients face accessing their GP stem from chronic staff shortages. General practice has been facing significant workforce pressures for a number of years. Recent analysis suggests that in 2021/22 there was a shortage of around 4,200 GPs in permanent roles, despite the increased numbers of GPs in training. While the deployment of additional roles brings some further capacity, it is clear that the government’s 2019 manifesto pledge to deliver 6,000 more GPs by 2024/25 will not be met. On top of this, fewer GPs are choosing to undertake full-time clinical work in general practice, while large numbers are retiring and leaving the profession – with burnout playing a role in these decisions.
General practice is in crisis because of difficulties in recruiting and retaining GPs, alongside a growing and increasingly complex workload. As a result, GPs are working harder than ever before, but patients are still finding it difficult to get appointments.
4. The government has claimed to have prioritised social care
At the 2022 Autumn Budget the government put more money into social care, with up to £2.8 billion more funding allocated for 2023/24 followed by £4.7 billion in 2024/25. However, social care has long been under-resourced. Significant reductions in local authority funding during the austerity years exacerbated this, leading to cuts to social care budgets. While more investment has been provided in recent years, in 2019/20 funding had only just returned to the levels of 2010/11 despite a significant increase in demand.
Growing pressures on services have been compounded by the failure of successive governments to deliver long-promised reform. As a result, the social care system is in crisis and is failing the people who rely on it, with high levels of unmet need and providers struggling to deliver the quality of care that older and disabled people have a right to expect.
In 2021 the government finally announced major reform to adult social care, with changes to the means test and a cap on the lifetime costs of social care, which would protect people against the very highest costs of care and enable more people to access state-funded care each year. Additional reform measures include further integration with health care and an intervention in the social care market intended to ensure local authorities pay a ‘fair price’ to providers for the care they commission from them. However, disappointingly, the implementation of these reforms have now been delayed until October 2025.
These reforms would not by themselves have ‘fixed’ adult social care. Short-term funding pressures, resulting from social care being long under-resourced, remain intense despite the extra money in the 2022 Autumn Statement. Wider system reform of social care is needed to address the other fundamental problems, including high levels of unmet need, chronic workforce shortages and a fragile provider market. The pressure on services also has a significant knock-on effect on the NHS, as thousands of patients who are well enough to be discharged are unable to leave hospital due to delays in identifying social care support.
The goal of reform should be a social care system that meets people’s needs more effectively, with a focus on greater personalisation, higher quality and wider availability of services.
This government has disappointingly delayed introducing its significant reforms to social care funding and eligibility. The social system remains under intense pressure with an unstable provider market, a workforce crisis, and high levels of unmet need. Unless these problems are addressed, it will continue to fail the people who rely on it.
5. The NHS is being privatised
Private companies have always played a role in the NHS, with services such as dentistry, optical care and community pharmacy being provided by the private sector for decades, and most GP practices are private partnerships. The NHS and the private sector have also established partnerships for the delivery of clinical services such as radiology and pathology and non-clinical services such as car parking and management of buildings and the estate, while independent hospitals have been used under successive governments to provide additional capacity in response to pressures on NHS services.
Identifying how much the NHS spends on the private sector is not straightforward but estimates can be made using data from the annual accounts of the Department of Health and Social Care.
Following the Health and Social Care Act 2012, which extended market-based principles and introduced more competition into the NHS, the number of contracts awarded to private providers increased. However, this did not lead to an increase in the proportion of the NHS budget spent on private providers, in large part because the majority of contracts tended to be smaller than those awarded to NHS providers. In 2019/20, before the pandemic, NHS commissioners spent £9.7 billion, or 7.2 per cent of the Department of Health and Social Care revenue budget on services delivered by the private sector. This proportion has remained largely unchanged since 2012.
Throughout the Covid-19 pandemic, the Department of Health and Social Care and the NHS entered into new contractual arrangements with the independent hospital sector to increase capacity. These arrangements provided access to additional beds, staff and equipment to treat patients during the peak of the pandemic and are being used now in some places to support efforts to reduce how long people wait for routine care. As a result, spending by NHS commissioners on services delivered by the private sector increased to £12.2 billion in 2020/21. However, in the context of the significant additional funding provided in response to the pandemic, this again represents only around 7 per cent of the total Department of Health and Social Care revenue budget.
The Health and Care Act 2022 removed the competition and market-based approaches introduced by the 2012 Act. This gives commissioners greater flexibility over when to use competitive procurement processes, reducing the frequency with which clinical services are put out to tender and allowing contracts to be rolled over where the existing provider, most likely to be an NHS provider, is doing a good job.
While over the past decade there hasn’t been a meaningful change in the proportion of the NHS budget spent on the private sector, recently with NHS waiting lists and times increasing there has been a rise in the number of people self-funding their health care. The increase in self-pay shows that despite the best efforts of staff, the NHS isn’t meeting the needs of the public. However, history shows us that once NHS waiting lists start to come down then the public appetite for out-of-pocket expenditure on health care reduces considerably so this is unlikely to be a long-term trend.
There is no evidence of widespread privatisation of NHS services. The proportion of the NHS budget spent on services delivered by the private sector has remained broadly stable over the past decade. However, there has been a recent rise in the number of people choosing to use the private sector, paying for their treatment, in the context of long NHS waiting lists and times.
They have privatised it and there is no care. Profits matter, the individual does not. It is awful, I feel for anyone who is in your situation and is tackling day to day problems with social care providers.
It is also a money making machine for the people who own these companies. It is a disgrace!
I have been my wifes carer for forty years (who is a bed bound quadriplegic( owing to the ravages of MS9) and I have
witnessed an ongoing serious decline in the standard of Social Care since it was privatised ,given that this created a conflict of interest ,between care qualityand proft and loss.
Traing within care is now non existant ,as care conpanies simply want their staff "on site " makig money ,irrespective of the quality of care provded with management taking no part in the standards that their staff provide and having been forced into hospital on more than one occasion as the result of poor care ,Care providers drop such people like a stone and withdraw without concience. The nett effect of this being a continuing fall in standards ,with CQC and Safegarding being toothless bull dogs
As a result i studied care over many years ,in order to ensure that the standards of care that my wife requres is maintained at all times, I constantly lobby for better care through the media and directly to Government via my MP and I make myself avaiable to anyone who experience problems with obtaining care or suffer from poor care quality.Sadly however ,not everyone can access such help and many suffer as a consequence .
Feedback from service users who are visually impaired or blind is that of appalling waiting times, poor information relating to a diagnosed condition, poor or no signposting to other agencies for support. There seems to be an acknowledgement that the NHS is being privatised and will be incorporated into the failing USA system.
The Kings Fund does some great work, but it is important that articles are impartial. It is not clear why the author refers to left-wing commentators and the Tribune re the 'privatisation myth', but not for example right-wing commentators and the Daily Mail/Telegraph for the 'inefficiency myth'. And is the Lancet a left-wing journal? See https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(22)0013…
Has any thought been put into why, over the past decade or more, an increasing number of people are asking for medical advice either by visiting A&E, visiting UTC's, WIC's wanting to see their own GP or calling for ambulances? Are we really becoming more unhealthy? Have we lost some self-responsibility, and in many cases common sense?
From my own experience, I would say at least 70 % of the patients I see on a daily basis do not need to be seen, many of whom have 'googled' their symptoms and believe they have illnesses such as cancer.
Surely, if the root causes can be identified, examined and addressed, the burden could be eased dramatically.
Just a thought!
Your article completely fails to address the plight of all the people with a learning disability who have NO assets, so the Cap is irrelevant, and live on the MIG, which has just had only a 3% increase, the first in 6 years. The MIG is being eroded by the cost of living crisis so that people with a learning disability are now going to food banks to eat. the financial assessment system is far too badly framed as it allows local authorities weasel their way around leaving people enough money to live on and to be rigid in their allowance of Disability Related Expenses. No one knows about people with LD or how they live and they don't care either. It's all about the elderly, but the most expensive budget for local authorities is disability not the elderly. With more and more local authorities finding hard to meet their statutory duties and the workforce crisis in care, we desperately need our share of the NI increase NOW and not in October 23. Why doesn't anyone ever talk about disabled people and the way we treat them. And the Universal Credit national roll out is just around the corner where many disabled people will get even less benefits than they get now. Presupposing they can find someone who understands them to help apply for the benefit.