David Nicholson is right: The NHS will need more money

Former NHS chief executive, David Nicholson, warned last week that the financial problems in the NHS would become “crystal clear” before the year is out. He also said that the plan to make £22 billion in efficiency savings during the next parliament is “a big ask” and, given the NHS’s history, unlikely to be achieved. He’s almost certainly right and he should know. As he told John Humphrys, he tried to do something similar.

David Nicholson has become something of a hate figure on all sides, so much of what he said last week was drowned out by political noise. It’s worth listening to the interview though because he makes some valid points, one of which is that the problems the NHS is facing are similar to those in the health services of other advanced economies:

The good news is that the situation is the same everywhere. The difficulty is that no-one has found a solution to it.

The IMF said more or less the same thing earlier this month. In its Fiscal Monitor report, a twice yearly assessment of governments’ fiscal risks, it forecast that health spending in the developed world will continue to rise:

Few economies have undertaken fundamental reforms to improve the efficiency of health spending…. such spending will still rise significantly over the longer term.

The IMF predicts that heath spending will outstrip economic growth in almost all advanced countries over the next fifteen years. Compared to some other countries, and given that the proportion of its health spending funded by the state is one of the nighest in the world, the projection for the UK doesn’t look too bad. An extra 2.4 percent of GDP is not as much as the IMF was predicting a few years ago and well below the G20 and G7 averages.

Health spending increase 2030

Source: IMF Fiscal Monitor, April 2015

That said, it still leaves us spending a greater proportion of our national income on health than we do now. We may not have quite as big a problem as some other countries but our health service will still need a lot more money over the next fifteen years. Either that or it will have to stop doing a lot of things it currently does for free.

The £8 billion extra being promised by politicians will not be enough to stop the NHS from running out of money. The upward pressure on health spending is just too great. It is extremely unlikely that productivity improvements can outrun the rising costs of healthcare. The man who once tried to do it told us so last week. Whatever else you think of David Nicholson, he’s right about this one.

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5 Responses to David Nicholson is right: The NHS will need more money

  1. sdbast says:

    Reblogged this on sdbast.

  2. ainehannah says:

    Sorry sdbast that I’m addressing this to you instead of flip chart fairy tales, but, the reports at the top of this conversation held in WordPress Admin, are that there’s one comment on it and one like. The like is from me, and the only comment that appears is that you reblogged it. I’m learning lots of stuff at the mo, the logistics of politics being one of them. So. Can you tell me who you’re aiming this particular reblog at?

  3. Herring says:

    It’s pretty obvious that with an aging population and more treatments that can tackle chronic conditions, health spending is bound to increase. This has been obvious for the last few decades. The waffle about “efficiency savings” when the NHS is already pretty much the most efficient health service in the world is just that. Reorganisations, separation of commissioning from provisioning only help to make it less efficient. And then there’s PFI …

  4. metatone says:

    One of these days we’re actually going to have to come to terms with Baumol in a serious manner.
    Really up to now it’s been little more than an economists “gotcha” phrase, which obscures how as manufacturing employment decreases we actually probably need to rethink how our economy is arranged…

  5. Nicola says:

    Reblogged this on learn4kicks.

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