George Freeman outlines the importance of a strong economy to enable us to fund the NHS

7th June 2016

Responding to a debate on NHS funding and comparisons with similar healthcare economies, George Freeman outlines the importance of a strong economy to enable us to fund the NHS.

I thank my hon. Friend the Member for South West Wiltshire (Dr Murrison)—my honourable and clinical friend—for bringing this debate to the House. I am only sorry that there are not many more people here this evening, because this subject goes to the heart of the prosperity, sustainability, health, wealth and resilience of our economy and society in the 21st century. I am very grateful that he has raised it.

This subject raises, and my hon. Friend has raised, a number of important issues. I start by pointing out that our ability to fund the NHS is profoundly based on our ability to run a strong economy. Without getting distracted into discussing the merits of the case for Brexit, I would just say that it is very difficult to find any serious commentator who thinks that leaving the European single market would be good for our economic growth prospects. It would therefore have a direct impact on our ability to fund the NHS.

My hon. Friend made a number of important points. He rightly flagged up the importance of outcomes not inputs, and said that we should be driven not by inputs, but by outputs. He spoke of a better use of existing budgets, as well as the need for new money. He mentioned the importance of new care pathways that are changing the way we diagnose and treat disease, and indeed prevent disease in the first place. He also spoke of the importance of technology and productivity in allowing us to get more health for every pound that we spend. The mission that I am delighted to say sits at the heart of the new portfolio that I hold as the first Minister for Life Sciences is to accelerate the uptake of innovation in our healthcare system to help us deliver more health for every pound, and to generate more pounds from our life sciences and health technology sector to help pay for our growing health costs as a society.

My hon. Friend touched on the fact that we have always had a mixed healthcare economy in this country—a mixture of public funding, charitable funding and some private funding. That mixed economy is mirrored across Europe, with different countries having different balances. He raised the equally important issue of health and care integration, and how as an ageing society we can tackle that challenge.

In the short time available, I want to say something about international health comparisons, which my hon. Friend raised, health outcomes and what the Government are doing. He mentioned the 2010 Government White Paper, “Equity and excellence: Liberating the NHS”, in which it was acknowledged that more needed to be done to improve health outcomes in comparison to other countries. It stated:

“Compared to other countries…the NHS has achieved relatively poor outcomes in some areas. For example, rates of mortality amenable to healthcare, rates of mortality from some respiratory diseases and some cancers, and some measures of stroke have been amongst the worst in the developed world.”

I do not shy away from that. We are in the process, with NHS England, of gripping those issues.

It is true that the NHS has, at times, scored relatively poorly on being responsive to particular patient groups. We have had problems with MRSA that were worse than the European average. There is some international evidence that shows that we have much further to go on managing care more thoroughly. For example, the NHS has had high rates of acute complications of diabetes and avoidable asthma admissions.

I do not for a minute come here tonight to pretend that everything is perfect. But the truth is that it is difficult to compare like for like, as all healthcare systems are different and there are many ways to compare them. For example, the OECD’s latest report on amenable mortality rates shows that the UK has average rates of amenable mortality in the OECD, and is not among the worst in the developed world, as has been suggested at times. The NHS has been ranked first overall in the Commonwealth Fund report. I accept my hon. Friend’s point about the report only measuring certain factors, but on quality, access and efficiency the NHS was ranked the No. 1 system in the world—I do not deny that scope for improvement was flagged in outcomes and healthy lives.

On the latest OECD data, for 2013, it is true that total health spending in the UK, inclusive of public and private spend, at 8.5% of GDP is lower than the EU15 average of 9.5% of GDP, but it is around the same as the OECD average of 8.9%, and the UK delivers above average health outcomes for an average level of expenditure within the OECD. The majority of UK health funding is through general taxation. Reviews of the evidence have shown that using general taxation as the main mechanism for healthcare funding is still fairest and most efficient. That raises the long-term point that my hon. Friend is flagging, which is that we need to think about how we want to fund the levels of healthcare that our ageing society is likely to need.

The OECD has said that no broad type of healthcare system performs systematically better than another in improving a population’s health status in a cost-effective manner. In his 2002 review, Derek Wanless concluded, interestingly:

“Private funding mechanisms tend to be inequitable, regressive (those with greater health needs pay the most), have weak incentives for cost control, high administration costs and can deter appropriate use.”

For that reason and many others this Government are absolutely committed to funding the NHS through the existing mechanism to the highest level we can afford as a society.

On health outcomes, I want to flag in particular the point my hon. Friend made about cancer. Cancer survival rates are at a record high and continue to improve, as shown by the latest figures from the Office for National Statistics in February this year. We know that we have to continue to do better. Every other country is improving, and technology is changing; that is why the independent cancer taskforce report, “Achieving World-Class Cancer Outcomes. A Strategy for England 2015-2020”—published to wide acclaim in July 2015—has pulled together a consensus from the whole cancer community. That strategy sets out a number of important measures that we are committed to and are seeing through: a radical upgrade in prevention and public health; a national ambition to achieve much earlier diagnosis; establishing patient experience on a par with clinical effectiveness and safety; and transforming the way we support people living with and beyond cancer, as there are now 850,000 people living with cancer.

New drugs on the horizon offer the prospect of actually curing cancer in some patients. That is an extraordinary breakthrough, and we are making the necessary investments to embrace genomic personalised cancer services in the NHS and ensure that commissioning, provision and accountability processes are brought up to date and are more fit for purpose. At the heart of all that is the need to adapt to the new drugs coming through, which is why I have launched the accelerated access review to look at the way in which we assess, adopt and reimburse new medicines, and unleash the power of our NHS to provide data and genomic insights to drive the increasingly personalised and precision medicines that the cancer community is producing.

I do not want to pretend that the issues my hon. Friend has raised are not real. They are real, for a number of reasons, not least our rising population. By 2030, England’s population is forecast to reach 60.2 million, a rise of more than 6 million from 2015. Over the same period, the number of people aged 85 and over is expected to grow by more than 74%, an increase of 1 million from 1.3 million to 2.3 million. That puts huge pressure on our system of both health and care, and speaks to the importance of integration. That is why we have supported NHS England’s own five-year forward view—its own action plan; I am sure that, like me, he welcomes the fact that as a result of our reforms NHS England’s clinical and professional leaders are now able to set out their requests for how they want to manage the system, and we fund them and hold them to account in doing that. It has put in place a number of important mechanisms to change the models of care and to update how the system treats those key chronic diseases. If those services continue to be provided under the old model of 1947—silo care—they will put unsustainable pressure on our system.

NHS England is putting in place a range of measures, including the new care model vanguard sites—there are 50 of them around the country—and the Carter report on procurement. We are improving clinical commissioning group performance through the Right Care programme. We are putting in substantial extra money, including £2.1 billion in the sustainability and transformation fund, £4 billion for technology and the digitisation of the NHS, and billions for new drugs.

Crucially, we need to upgrade how the system diagnoses and treats so that we can liberate people from the 20th century model of heavy dependence on the state system to provide healthcare at its convenience, where people queue to receive healthcare. We want to move to a system in which people can live with and manage diseases better from home and be productive citizens in the economy and society. A huge amount of work is happening on new care pathways.

Integration was at the heart of my hon. Friend’s speech. We need to develop a health and care system in which we recognise that, particularly for the elderly, health and care need to be seamless. In our system today, they are not. That is why we have set up the better care fund, and given local authorities the freedom to raise extra money through the local care precept, which will in itself put £3.5 billion extra into supporting care, including £500 million for disabilities facilities, which will prevent 8,500 people from needing to go into care homes.

We are putting the money in to try to support local health and care integration, but we want to go further and faster, which we must do as a society and economy. We do not want to impose top-down solutions; we want to create situations in which local health economies can adopt the right mechanisms and the right processes for them.

In this Parliament, we have responded to NHS England’s leadership’s requests. It set out clearly before the election its five-year forward view and forecast that, by 2020, we would be looking at £30 billion of extra health costs, of which it said £22 billion would be avoidable with technology, transformation, better care models, digitisation, smarter and remote diagnostics, and more people being empowered and enabled so that they would not have to present at GP surgeries and hospitals so often. We have backed that plan. It asked for £8 billion a year, but by 2020 we will give it £10 billion. We have front-loaded that with £3.8 billion in 2016-17, the £3.5 billion for social care and the £4 billion for technology. Nobody can say that the Government have not put their money where the NHS’s mouth is. The NHS said that that is what it needed, and we have provided it.

In giving succour to the idea of a royal commission, I would not want to undermine that very important settlement, but I recognise that the points my hon. Friend has raised go to the heart of the big health and care debate we need to have as a society. The Government do not believe that a royal commission is the right solution, but I support the debate and want more of us to have it locally.

In the end, all hon. Members know that it is in their local health economies that the leaders who can crack this problem for us exist. We need to incentivise them. That is why the devolution plans and the integration of devolved budgets, and the measures we are considering to incentivise local health economies—we want not to reward them through tariffs for the treatment of disease, but to reward them for the prevention of disease—are so exciting. Ultimately, they provide the basis for optimism in the long term. We need to get more out of the money we spend as well as raise more money as a society. I am grateful to my hon. Friend for raising this important issue.

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