NHS funding: smoke and mirrors

NHS waiting room

The Tory government is claiming that the long-term financial crisis of the NHS is over: its Budget settlement of an extra £20.5bn in real terms above the 2018/19 level by 2023/24 now means that the NHS can meet the health care needs of its patients. As ever, the government use of figures is all smoke and mirrors: in real terms, the proposed funding increase falls way short of the minimum annual increase of 4% required to stand still, and shortages of trained staff are getting worse year by year. HANNAH CALLER reports.


If the current shortage of over 100,000 staff across NHS hospitals continues, it is estimated that by 2030 the NHS will need 250,000 more staff than will be available. If the number of staff taking early retirement or simply leaving the NHS continues, with insufficient new recruits and overseas staff, the gap may be as high as 350,000 by 2030.

The lack of staff is exacerbated by cuts in funding and bursaries for training, nurses and midwives in particular, restrictive immigration policies, and a rising number of doctors and nurses leaving their jobs early in major part because of overwork and low morale. Central government contribution to training has dropped from 5% of health spending ten years ago to 3% now.

In Britain, over a third of newly-recruited doctors and half of nurses are trained abroad. This not only saves the British state the costs of training, but it is also a brain drain from poorer nations and contributes to the deterioration in their health services. It costs £220,000 to train a doctor and £125,000 to train a nurse. Britain saves millions of pounds bringing in staff trained overseas. Taking Ghana alone, Britain saves £65m by employing 293 Ghanaian doctors and £38m by employing 1,021 Ghanaian nurses. This money exceeds Britain’s annual aid to Ghana, yet the government tells us it is helping Ghana to end its reliance on aid. It is a form of looting.


An additional £20.5bn for the NHS by 2023/24 would be equivalent to 3.4% real-terms extra funding per year. Given that an increase of 4% a year is needed to keep up with funding the NHS on a sustainable level, this already represents a shortfall. The Nuffield Trust points out that because of the annual 1% NHS funding uplift since 2010/11, NHS hospitals are about £1bn in debt and face a £4.3bn annual shortfall. In the past, financial juggling has managed to find non-recurrent funding to stave off hospital bankruptcy. This balancing of the books comes at a price though: elective surgery waiting lists get longer in an effort to meet demand for emergency services, while buildings and equipment fall into disrepair. By 2017, the estimated backlog in repairs was £5.5bn, and most of the £7.9bn for three years’ worth of investment in primary and community care was used for the emergency sector. It is in this context that £20.5bn is being promised. £6bn or more will be needed each year to fund the recurrent costs to a rising number of patients, as well as the rising costs.

NHS England’s accounts for 2017/18 looked healthy as they recorded an operating surplus of £970m against a budget of £109.5bn. However, this money then had to be used to pay off the hospital deficit of £986m. The surplus was a fiction. Added to that is the fact that 2017/18 saw worsening elective operation waiting times as hospitals in the red had to cancel planned procedures to ensure they met rising demand for emergency services. The consequent 200,000 rise in patients on waiting lists, and the large fall in the number of people seen within 18 weeks of referral, meant a financial saving for NHS England. But the £500m lost income for hospitals cancelling routine operations merely added to their financial pressures.

NHS England says that overall NHS activity increases by 3.1% a year, meaning that £3.5bn of the extra £6bn next year will go immediately on the cost of the growing number of patients who will need treatment, assuming no change to the cost of the services. Furthermore, once increases in the cost of living are taken into account, lifting the 1% cap on NHS staff pay may require an additional £3.5bn per year. £7bn is gone before there are any improvements in the quality of the care or access to it. Each year the shortfall would add up, resulting in a deficit of £4bn by 2020/21 even with the extra money.

When promising the £20.5bn, Theresa May at the Tory conference said the priority was to improve elective waiting times. However, focusing on this alone would take up almost all the extra money, and, as it is, that money is also needed for meeting waiting times for cancer treatment, staffing, introducing parity for mental health services, dealing with the crisis in primary care, and recruiting extra staff. Simply filling 7,000 unfilled posts for nurses and doctors would increase annual expenditure by £500m per year.

While the waiting lists get longer for some, for others there is no likelihood of treatment without payment, and now without upfront payment. Under the Freedom of Information Act, The Guardian has revealed that between October 2017 and June 2018, 2, 279 people were charged upfront at 84 of England’s 148 acute hospital trusts. Of these, 341 did not receive treatment as they couldn’t afford it. Since 64 hospitals did not provide data, the figure will be even higher. It is now a year since NHS trusts in England have had to seek advance payment from those ruled not eligible for NHS care, such as ‘failed’ asylum seekers or those who have overstayed their visa. A 71-year-old Jamaican woman who was taken ill while visiting her family in London died because she could not afford a £30,000 upfront deposit at Hammersmith Hospital. The hospital also refused to take the family’s offer of £500 a month to begin treatment. In July 2017, the government predicted that upfront charging would save the NHS £20m per year, less than 0.02% of NHS England’s £110bn total health expenditure that year. Such is the cruelty of capitalism.