Health Spend At the Blair Benchmark

The Blair milestone has been reached. In a celebrated TV interview in the autumn of 2000 the then Premier Blair committed the government to raise NHS spending up to internationally comparable levels with our European partners or more widely with the OECD. Now our spending is over the OECD average –9.8 per cent of GDP compared to an average of 9.6 per cent. This is more than among others Finland, Australia and Italy. Spending on health per person is also now slightly above the OECD average at $3847 per person compared to the average of $3233.
For decades the problems of the NHS have been blamed on underfunding. It was said that the NHS may not have been the envy of the world but it was the envy of Finance Ministers. Now there are no more alibis. For the future there seems little chance of any large bail out where funds rise faster than inflation. The OBR Report paints a picture of falling tax revenues and might have said more about the forward commitments on public spending especially for an increased number of retired who expect improved public sector benefits and may not get them The NHS has its own forward commitments for PFI schemes and technical improvements.
The NHS and the private health sector are now much more important for the productivity of the whole economy than they were when the health service accounted for 3 per cent of GDP as was the case in 1950. There is also the potential for further drag on the economy as demand expands. Health services have a hidden economic and human opportunity cost in that they employ a large proportion of the most highly qualified personpower. How can we create conditions which would ensure that these abilities are fully used?
The key lies in a new drive for redesign of services. We have to improve quality and patient access for a level of funding which will be at best static in real terms. Yet we have a high cost, high tech model where spending has been growing by 4.8 per cent p.a. in real terms. Volterra is committed to working with health partners to make a creative and effective response to this rather large and threatening challenge.
There is an emerging model of healthcare which can deliver better services for patients. The model has four stages in prevention, early diagnosis, ambulatory treatment and care programmes. There is clear evidence from Scandinavia and from HMOs in the US that such a model can deliver better health for populations while containing costs.
Premier Blair in fact came to realize that his commitment to Euro level of spending was not enough for a good health service—for this were needed incentives and competition and patient choice. The agenda is still there and now inescapable.

(1)OECD Health at a Glance 2011. Key Findings United Kingdom.

By Nick Bosanquet, Director Volterra Health

Infrastructure Rules

It is fascinating how our attitudes have changed. Ten years ago, I was arguing the case for Crossrail – the London rail link which will increase capacity into central London by around 80,000 people in the peak – to an audience which was entirely cynical about our ability to deliver this.
An attempt to get the project off the ground in the early 1990s had failed and many experts were sure that the case could not be won. Indeed winning this case took a huge coalition of parties from business to local communities and the pressure of the new Mayor of London. I lost count of the meetings, conferences, campaigns and reports. Crucial to the case was the argument that this railway was about more than time savings. Instead it was about the economy. It was about delivering more people into the most highly productive part of the UK economy, thus enabling more jobs and more productivity.
I produced an entirely different kind of business case – one resting on output and jobs and the constraints imposed by a lack of capacity. This was crucial.
Now it seems that the argument about the importance of infrastructure is won. The Chancellor announced a long list of projects that were now going forward especially in road and rail, to be paid for by savings elsewhere. The justification is how this will support economic growth, which shows how the highest level of government has grasped that if the UK is to stay ahead, we will need an infrastructure which supports a 21st century economy – very different from the 20th century one.
London got lucky in the last thirty years. It was able to restructure away from manufacturing which was located around the ring roads and radial routes and towards services which were more productive in the central area because it had an overground and underground transport system with sufficient capacity to take up this shift in economic geography. That capacity had run out, but hopefully the re-investment will happen in time to prevent a sliding away of productivity.
However, new investment in still needed. The Chancellor has rightly supported the extension of the Northern Line to Battersea – a project which opens up regeneration on a major scale but can never be justified on standard transport grounds.
And he has recognised that London (and indeed the UK) needs to maintain its international status in aviation. A world class city needs a world class airport. Heathrow is too constrained to achieve this as air transport grows. The ideas for an estuary airport can give us the aviation capacity we need and also be linked to state of the art access for freight and passengers which will improve enormously the prospects for the rest of the country which will be able to access Europe by rail and the rest of the world by air while bypassing London.
What we now need to do is to sort out properly the funding for these projects, which should pay back. Whether in fares, development, or taxes we need to be clear that we expect these investments to pay their way, so that further investments can also be made. This will require a very different approach to project appraisal, risk and finance than those we have made so far.

By Bridget Rosewell