As budget freezes and reforms set in, what next for the NHS?

In the light of the damning King’s Fund’s report, Charlie Cooper examines some of the health service’s unpalatable options

The NHS budget has until now been protected, but the rising cost of medicines and an ageing population are stretching finances to the limit (Universal Images)

Option 1: Keep the budget steady

Since coming to power, the Coalition has ring-fenced the health budget, protecting the NHS from the kind of swingeing cuts that other departments have suffered. However, the rate at which the budget has increased has slowed down to almost zero. With ever-increasing demand for care and rising health-care costs, this means the NHS has – effectively – been cut.

Carrying on along this path after the 2015 election would, according to the King’s Fund, mean accepting “significant cuts” to services.

Richard Murray, the think-tank’s director of policy, said it was hard to speculate which services might be under threat, but on past form, public health (such as smoking, alcohol and obesity campaigns) might be the first to face cuts, along with training for doctors and nurses.

“If there’s going to be a decision to cut, it’s going to have to be a very explicit one by any new government,” he told The Independent. “You might lose temporary staff, you cut back on the things that physically you can cut back on.”

Currently the NHS budget is due to increase by just 0.1 per cent in 2014/15. The Coalition has limited itself to similarly small increases since it came to power. According to Mr Murray, this amounts to a sustained financial squeeze on a scale “unheard of” in the history of the NHS.

“There’s a difference between not cutting the NHS and giving it the growth that it may need,” he said. “Holding down the budget so that it doesn’t grow at all is pretty exceptional. Even though it may look good compared to [the cuts] to local government, by health standards it’s pretty remarkable.”

Option 2: Increase spending

The obvious answer to the NHS’s financial crisis, and the one that has been turned to repeatedly in the history of the health service, would be to increase spending again.

While the NHS represents a sizeable portion of the UK Government’s total public spending, it is in fact relatively inexpensive by international standards. France and Germany, countries of comparable economic development to the UK, both spend more as a proportion of GDP on health than the UK. The US spends considerably more, albeit in a different health economy ruled by the whims of the market.

Advocates of increased spending cite the international comparisons to point out that there is still plenty of scope for the NHS budget to increase, arguing that the decision not to do so is a political, not an economic one.

Dr Clive Peedell, leader of the National Health Action Party, which will field candidates in the European elections and the general election on a platform of opposing health service cuts and resisting any attempts to expand the role of the private sector, said that the consequences of keeping the budget frozen would be “hospital closures, service cuts and mass staff redundancies”.

“Next winter could be the tipping point for the NHS and for the electoral prospects of the Conservatives and Liberal Democrats,” he said. “They have made the catastrophic mistake of pushing forward an NHS austerity agenda, whilst simultaneously attempting to deliver the biggest top-down reorganisation of the NHS in its history.”

Labour, historically seen as more sympathetic to increased health spending, are yet to make any firm electoral commitments on NHS funding, but have pledged to revoke many of the Coalition Government’s health reforms.

Option 3: Find new sources of funding

The unthinkable option for most politicians, at least in terms of their public pronouncements, would be to find new revenue streams for the NHS.

One significant (but under-reported) clause in the Coalition’s health reforms lifted the ceiling on the amount of income an NHS hospital trust can make from fee-paying patients: from 2 per cent to 49 per cent.

Think-tanks including Reform, which has close links to advisors of both the Health Secretary Jeremy Hunt and David Cameron, have discussed introducing fees for certain services, such as seeing your GP, as a possible means of making the NHS more affordable in the long-run, without forcing the Treasury to open the purse strings.

Another tool in the Government’s inventory would be to expand the role of the private sector. Health officials are understood to admire the work that Circle Healthcare have done at Hinchingbrooke, the first NHS hospital to be run by a private provider.

For cash-strapped healthcare commissioners, private providers who offer to run NHS services at a competitive price may become an increasingly attractive option.

However, fees and privatisation are still, according to Mr Murray, “political anathema”, and it would be a bold move on the part of the Conservative Party – or the Liberal Democrats – to publicly promote them as a key strategy ahead of the next election.

Mr Murray said that the political parties would need to be cautious of anything that challenged widespread public “loyalty” to the NHS.

“I don’t think the public yet are aware that trouble looks increasingly likely,” he said. “As it comes closer and more people open up newspapers to find another hospital going cap in hand to the Department of Health to say they can’t pay the bills, it’s a question the political parties will have to put to the public – what do you want to do about this? Loyalty ratings in the NHS are still very high. These are questions that will play out over the next year.”