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The Institute for Fiscal Studies has exposed how the cuts proposed under
the Comprehensive Spending Review will harm the economy as well as the
most vulnerable in society. David Cameron and Nick Clegg continue to
insist their proposals will create a fairer society. They intend to
increase VAT, which is regressive, and say that they are doing this in
the interest of fairness. They cut benefits to the poor and say this is
in the interest of fairness. They cut child benefits and insist this is
fair. They announce nearly 500,000 job losses, condemning many to life
on the breadline, and claim this will lead to a better future.
The president of the British Medical Association, Sir Michael Marmot, in
his address to World Medical Association's general assembly in
Vancouver, described this is a "grotesque parody of the word fairness".
It is likely that this aspiration for fairness, however laudable, will
come to haunt the coalition.
Another false impression perpetuated by the Government is that the
National Health Service has been spared the scalpel wielded by George
Osborne. Although the NHS budget has been relatively protected, the
health service still has to find cost savings of £20 billion by 2014.
This is already resulting in cuts to services, staff and rationing of
elective treatments such as cataract surgery and hip replacement operations.
The assertion that NHS spending will grow in real terms is baseless: a
commitment to a 0.1 per cent real-terms rise in annual spending — just
about the lowest level that could still claim to honour the Government's
pledge – is neither here nor there. With inflation in healthcare
currently running at more than 4 per cent, the health service's
purchasing power for drugs and equipment will suffer significantly.
Considerable money from the NHS budget will have to be siphoned off to
help to pay off debts accrued from the Private Finance Initiative. The
annual charge that the NHS pays for acute PFI facilities is about
11-18.5 per cent of hospital turnover, compared with 5-8 per cent for
non-PFI facilities. This produces an affordability gap that is filled
only by diverting money from patient care and creating new pressures for
hospital, community and primary care service closures in the medium and
the long term.
There is also the wide-scale pay decrease that staff have to contend
with at a time of rising family expenditure and a potential threat to
pensions. Further, the free prescriptions for the long-term ill,
one-to-one cancer nursing care and one-week waits for cancer diagnostics
promised by the last Labour Government are being scrapped.
The £2 billion announced for social care is another economic deception,
since £1 billion of it will actually be drawn from the current NHS
budget – and an additional £1 billion a year will be added to the
personal social services grant to local government. However, the reality
is that this money is not ring-fenced and hence there is no guarantee
that it will be spent on social care. Research to be published by the
Nuffield Trust next month reveals how social care can substitute for
hospital care and vice versa by helping to reduce admissions or earlier
discharge from hospital. It is vital that social care is funded
adequately – otherwise there will be even greater pressure on health
budgets. Cuts of billions of pounds to local government budgets could
have a knock-on impact on NHS services.
The overall effect of all these measures on healthcare is set to be a
declining share of gross domestic product, which is unlikely to be
enough to keep pace with the demand for services, fuelled by the
spiralling costs of managing diseases such as obesity, depression and
diabetes. Cuts in expenditure in other areas, such as welfare benefits,
will also have a knock-on effect on demands on the NHS.
Vulnerable groups often have complex health needs and it is essential
that help remains available to them.
The white paper reforms will use much of the financial resource to
stimulate the private sector and transfer or outsource large numbers of
healthcare initiatives and jobs to the private sector.
Competition will become an ideological end in itself. Monitor will
become a quango with a remit to ensure there is competition in the NHS
and to intervene if there are signs of anti-competitive behaviour. In
addition, the Government's policies will generate demand for the
healthcare insurance industry, as rationing will increase due to the
financial pressure. The Nuffield Trust research suggests that GP
commissioning may add £1.2 billion to NHS expenditure, which is not
factored into the Government's aspiration for change.
The NHS has not faced this level of challenge in its history. The
universal healthcare provided by the NHS is in serious danger of
becoming unsustainable. Even at this stage, David Cameron, who pledged
his loyalty to the NHS before the general election, needs to halt this
futile and expensive reorganisation that threatens to bring in
privatisation through the back door.
The electorate wants modernisation of the NHS, not its destruction. If
the coalition truly wants to reduce waste and inefficiency, it should
abandon the mantra of competition, market forces and choice of provider
and instead work towards developing a co-operative and integrated
healthcare system, with collaborative commissioning at the heart of how
precious resources are utilised.
Kailash Chand is chairman of Tameside and Glossop primary care trust
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