Briefing: NHS

Critical condition

From Socialist Review, No. 172, February 1994.
Copyright © Socialist Review.
Copied with thanks from the Socialist Review Archive.
Marked up by Einde O’Callaghan for ETOL.

Health spending 1960–90

Britain spends less on health than most other advanced capitalist countries. As a proportion of its Gross Domestic Product, expenditure on health is lower than the US and lower than all the leading West European countries. In 1990, it was even lower than Ireland and Portugal. In that year, the US spent 12.7 percent of GDP on health, France 8.9 percent, Sweden 8.8 percent, Germany 8 percent, Italy 7.5 percent, Norway 7.4 percent, Ireland 7.1 percent, Portugal 7 percent and Britain 6.1 percent.
In each year between 1988 and 1990 Britain spent $1,000 per person on health, compared to $800 in Spain and $750 in Ireland. Italy spent $1,200, France $1,400 and Sweden $1,450.
The Tories say they have increased health expenditure every year. Much of this increase has gone on employing the vast number of additional managers needed to oversee the new internal market. Increased spending has also had to be made to keep up with more sophisticated medical technology. Expenditure has not kept up even with conservative estimates of demand over the last decade. Britain needs to spend an extra £4.5 billion to raise it to the average level of expenditure of similarly developed countries.
Under the internal market system health authorities are planning cuts – Birmingham: five hospitals to be merged onto three sites; Edinburgh: 1,000 beds to be cut and five teaching hospitals down to two; Glasgow: 1,200 beds to be cut and five teaching hospitals to be reduced to two or three; Liverpool: 500 to 1,000 beds to be cut; London: 2,500 beds to go and seven hospitals to be closed; Manchester: 500 beds to go.
Under the old system, if hospitals overspent, the Department of Health covered the excess in the following year. Today all ‘trust’ hospitals have been told that if they make a loss the DoH will no longer make up the difference. So they close wards.
In last April’s Tomlinson Report the Tories promised an additional £43 million for primary and community healthcare in London. Only £3.5 million is new money. The rest has been taken from existing national and London health budgets.
The internal market penalises inner city and teaching hospitals whose contracts are dearer because of higher hospital, staffing, research and teaching costs. Another reason for cuts is the new competition between hospitals.
Healthcare is distorted by penalising hospitals for being efficient. Those who fulfil their contracts early in districts that have no funds to pay for additional services are left with empty wards and facilities. Many hospitals have begun to develop a two tier system to fill spare capacity. Cash strapped health authorities such as Bristol, Camden and Islington – whose funds are not being increased sufficiently to enable them to cope with the growing costs of healthcare – are seeking to reduce the prices they pay for services or else are seeking more healthcare for less money.
Financial constraints have induced health authorities to ‘downsize’ their contracts with hospitals. For example Riverside hospitals were asked to increase the services they offered by 1 percent while contract funding for the hospitals fell by £1.5 million.
There is a growing split between fundholding and non-fundholding general practices. When a health authority runs out of cash only fundholding general practices can buy more treatment. Most inner city practices are resisting becoming fundholders because levels of provision have favoured leafy suburban areas, and they don’t want to ration funds allocated to them among their patients. But pressure on them is growing as the Tories squeeze health authorities and attempt to induce GPs to become fundholders who will purchase services direct from hospitals.
Total gross NHS expenditure in 1991-92 was over £3 billion greater than in 1990–91 (£33 billion compared to £29.2 billion). After taking into account NHS pay and drug price increases, this left a record £1.1 billion development money. But much of this money was not spent on patients. £100 million was spent on preparing hospitals to become trusts. In the fourth wave of trusts each was granted £254,000 for administrative costs.
Fundholding is creating huge bureaucracies with cash diverted from patient care: £25.6 million in 1991–92, £14 million for management costs and £11.6 million for computer costs. This could have paid for 2,000 extra practice nurses. Of the extra £3 billion spent in 1991-92 on the NHS, £637 million went on patient care (20.5 percent), £383 million on new administration costs (12.3 percent). The extra administration costs of the internal market since 1989 are £1.2 billion.
The increase in number of managers compared to clinical staff (England) is: Senior managers: 1989 – 4,610, 1992 – 15,590 (262 percent increase). Administrative/clerical: 1989 – 116,840 1992 – 134,990(15.5 percent increase). Nurses/midwives: 1989 – 398,050 1992 – 378,790(4.8 percent decrease). Between 1989 and 1992 the number of nursing staff decreased by 5,850.
NHS trust chiefs won salary rises of up to 33 percent in 1991–2. Since the first 57 trusts were established, the salaries of chief executives have rocketed. The most highly paid receives £63,000 more than it is possible to earn within the mainstream NHS.
Total waiting lists in England were 1,030,763 by September 1993. This is a 1.3 percent increase since June.

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