How sustainable is Bevan’s NHS?

In an interview with Adam Cairns, chief executive of the Cardiff and Vale Health Board in the current Winter 2013/14 issue of the welsh agenda he says the Welsh NHS can be insulated from the increasingly market-driven health service in England. As he puts it, “Although they’re commissioning more and more of their services from the private sector, at the end of the day the state still pays the bill.”

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The problem with this is that the amount the state will be paying in future is likely to fall substantially. There will then be a knock on impact on the Welsh block grant as a result of the way the Barnett Formula, which determines the amount the Welsh Government receives, is calculated. These implications were made transparently clear in a speech Prime Minister David Cameron gave to the Lord Mayor of London’s banquet in November. He said his government was sticking with the task of bringing down the deficit, and then added, “But that doesn’t just mean making difficult decisions on public spending. It also means something more profound. It means building a leaner, more efficient state. We need to do more with less. Not just now, but permanently”.

This is a significant change of emphasis that will have major consequences for Wales. When he became Prime Minister three years ago David Cameron said he hadn’t come into politics to make cuts. They were being forced on him by circumstances. Now, however, he is talking about a permanent project of building a smaller state. Certainly, that is what Welsh Health Minister Mark Drakeford believes. As he tells the welsh agenda, if David Cameron wins the general election in 2015, he will have another five years to pursue a smaller state, after which “the NHS in Wales will be a very different organisation to the one it is today”. That is why he believes the general election will be decisive in influencing future planning of the Welsh NHS. For, as he says, if Labour wins, although austerity measures would have to be continued for a while, at least there would be a UK government in power that believed in growing state services rather than reducing them.

The reality is, however, that whatever government is elected at Westminster in 2015, financial pressures on the Welsh NHS will be inescapable. Last September the Wales Audit Office report revealed that if the Welsh Government’s spending allocations continue unchanged then health spending will rise from 42 per cent to 57 per cent of its overall budget within a decade. In the welsh agenda David Phillips, an economist with the Institute of Fiscal Studies, sets out in stark terms what this would mean for spending on other areas such as local government and economic development. The Welsh Government has changed tack in its budget for 2014-15 and is planning to increase real-term spending on health and social services by 1.3 per cent. But that means spending on local government will fall by 9.1 per cent and education by 11.5 per cent. If this were to continue for a decade then the Welsh Government’s budget would be distorted beyond recognition.

In their interviews with the welsh agenda both Adam Cairns and Mark Drakeford acknowledge this reality. Drakeford has some interesting ideas about how health and social services could be redesigned to deliver services more cheaply and efficiently. Tackling the 20 per cent or so of medical interventions which he says have little or no benefit is one. Recalibrating waiting lists so that a points system is deployed to prioritise patients is another. Adam Cairns is thinking about alternatives to the way the market is used in England to produce health efficiencies and drive down costs, suggesting more transparency and reporting of results – a competition of naming and shaming between hospitals.

If they are to work such ideas will demand a major culture shift in the way the Welsh NHS is managed. Some heroic optimism is required to envisage that the necessary savings will be achieved without making the service unrecognisable compared with the one we have today. But at least we should welcome the fact that key leaders in the Welsh NHS are facing up to the difficulties they face.