What former NHS chief's intervention tells us about the funding crisis

It is alleged that the NHS faces a “financial hole” over which our politicians are maintaining a conspiracy of silence. The claim comes from no less a figure than the former NHS chief executive, David Nicholson. He always prided himself on, indeed gained notoriety for, his Stalinist grip when it came to NHS finances during his time at the helm. After all, this is the man who launched the Nicholson Challenge to deliver efficiency savings of around £20 billion between 2011 and 2014.

As Nicholson himself acknowledged, no healthcare system anywhere in the world has achieved savings on such a scale. The NHS has proved to be no exception.

Now we have the Nicholson Intervention: no politician wants to talk about the “substantial financial problem” facing the NHS in the lead up to the election but they have to. What lends his intervention authenticity is its source. Nicholson is not an economist or a think tank pointy head issuing grave warnings from the sidelines. He has been in the thick of it and knows the terrain inside out. If anyone can spot a financial hole he can.

Real figure is more than £8 billion

And it all comes down to a simple message, although one that our politicians seem unable to accept or endorse: the NHS needs more money and lots of it. The much-quoted £8 billion is just to stay still – and some are arguing for a “transformation fund” to be part of the overall calculation. Indeed, if the NHS is to realise the promises our party political leaders are making then it will need a whole lot more new money and investment.

And a sound case can be made for this. Despite all the misplaced talk of low productivity, when compared internationally by the Commonwealth Fund, the NHS comes out top in terms of value for money. But it is under constant pressure that is simply not sustainable. Applying crude measures of productivity to a human service is any case neither sensible nor appropriate. Investing in health brings significant economic benefits – a healthier population is a more productive one. Health and wealth go together.

‘24 hours to save the NHS’

Those with longer memories will recall how the last government faced a similar financial scenario in 1997 – “24 hours to save the NHS!” was New Labour’s slogan.

Tony Blair: a day to save the NHS.Chatham House, CC BY

The upshot was the Wanless report published in 2002 which looked 20 years ahead to determine the challenges the NHS would face and whether it could still afford to meet them. Derek Wanless, a former banker brought in by Gordon Brown to advise the government, concluded that a healthcare system free at the point of need was indeed viable but that the NHS was underfunded. His report triggered several years of significant investment which ended in 2008.

Although the government of the day enthusiastically signed up to Wanless’s recommendations in the form of the “fully engaged scenario”, they were never fully implemented, especially the emphasis accorded to public health. Indeed, the present NHS chief executive, Simon Stevens, claims in his Five Year Forward View that many of the problems currently facing the NHS are a direct result of the failure to keep faith with Wanless’s recommendations.

Macroeconomic circumstances may be different now but the core issue remains the same. Now, as then, the solution is essentially a political one. There is nothing predetermined about there being no options to finding further funds to fill the NHS’s financial hole. The choice is not an economic one.

The silence of the politicians

This is the true significance of the Nicholson Intervention. He is alleging that the NHS confronts a “substantial financial problem” which politicians are ducking. Why he should be so surprised about this in the run-up to an election that is too close to call is perhaps more surprising.

It is ironic that Nicholson has decided to speak truth to power from the safety of semi-retirement. He didn’t do it when NHS chief executive, at least not when it came to the government’s misconceived NHS changes which he presided over and delivered on time for his political masters.

As Nicholson famously said, the changes were so big they could be seen from outer space. But he also described them as amounting to a “compelling vision for an NHS configured to deliver increasing quality of services” with the NHS on “a journey of change”. No hint here of what he now considers to have been something of a folly.

In his critique of current policy, Nicholson singled out the Andrew Lansley reforms as a distraction from the need to improve services and efficiencies. Most respected observers said exactly this at the time claiming that the changes amounted to a huge distraction. For their pains they were accused of being dinosaurs and were ignored, despite the sizeable evidence base on their side testifying to the high cost of structural change and its generally disappointing results.

The silence of politicians on such matters, combined with a denial that they may actually have made a mess of things while bullying managers into doing their bidding, is what fuels public anger and cynicism. Can any party truly be trusted with the NHS?

Disclosure

David Hunter's article does not reflect the views of the NIHR or the Department of Health's policy research programme