"The NHS is doomed because it can’t keep up with the costs of new drugs and treatments.”

This pressure exists in every healthcare system around the world. New treatments and drugs are being developed all the time and push up costs by around 2-3% a year. This is why it is essential that the government maintain their commitment to adequately fund the NHS. In other countries the cost of medical advances is passed on to the individual in the form of higher insurance premiums or medical fees. Whilst the NHS is funded through taxation it has the fairest system for handling this pressure.

Also medical advances can help save money. Treating more hospital patients as day cases, with less invasive techniques such as key hole surgery, has reduced costs and speeded up patient recovery. Investment in detecting illness earlier also saves money. Better treatments mean that conditions like diabetes and heart disease can be managed effectively without visiting hospital.

There have been many changes in treatment since the NHS began. To its credit the NHS has incorporated many of these into its service, making them available to the whole population. This will become more difficult as the NHS moves away from being a cooperative network, toward a more fragmented set of competing businesses.

“The NHS is a big hole into which public funds endlessly pour.”

Overall our NHS costs over a £100bn a year, a bafflingly large number. In fact it’s almost a fifth of overall government spending and roughly equal to the value of the entire economy of Finland. But then the NHS does employ 1.5 million staff (ONS) and treats 1 million patients every 36 hours. It is undoubtedly a massive and costly exercise, but despite this it might surprise a few critics of the NHS that a recent international comparison by the Commonwealth Fund put the UK top of the table for providing value for money.

For decades the NHS has struggled to do its job on far less investment than most other countries. But in the last five years consistent increases in spending have pushed the UK to just under the international average. But we are coming from a long way back, so even though the amounts of public money going in are large, it would be wrong to think of ourselves as big spenders on health, or of our health service as expensive.

Costs will rise every year but it is vital that money goes on patient care. Worryingly in the last few years the government’s drive to introduce competition and the private sector has meant more waste than previously. We should bear in mind the last experiment with competition in the NHS in the early 1990’s, which doubled administration costs.

“The private sector is more efficient than the NHS and can help it keep down costs.”

There is no evidence that the private sector involvement in the NHS has made it more efficient. In two specific areas its impact has been the reverse.


Under this scheme NHS trusts have signed contracts with private consortiums to fund the building and maintenance of new hospitals. There is now overwhelming evidence that this is a hugely expensive way of building hospitals. PFI projects will cost more than six times their building costs over the course of the contracts. This has a direct effect on patient services as hospital trusts pay rent and maintenance provided by the PFI consortia first, which puts pressure on the budgets for other services.


These are private clinics usually specialising in straightforward treatments, such as cataract operations or hip replacements. The NHS signs contracts with private companies to carry out the work at a fixed overall price, which is paid whether the operations are actually performed or not. This means that ISTCs get special treatment, with contracts that guarantee full funding regardless of how many patients opt to use their services.

The government originally made lofty claims that ISTCs would provide the extra capacity to cut waiting times, stimulate innovation and choice. A Parliamentary report by MPs found that this was not the case. And the Government’s own figures in 2008 confirmed that ISTCs cost on average 11.2% more than the NHS alternative.

Many commentators believe reductions in waiting times cannot be attributed to the private sector either. Former Labour health secretary Frank Dobson said “In 1998 we did 170,000 cataract operations. In 2004 we did 300,000. The private sector did just 20,000 operations. It wasn’t the private sector that brought down waiting lists.”

“The NHS is too inflexible, will never meet expectations and so we must change to a more European style system.”

In the UK we fund health care largely from public taxes. The most popular alternative in other countries is to pay into some form of insurance scheme. This can be set up either by the government, or by encouraging people or employers to buy private medical insurance.

There is no point in changing to a way of funding that is less fair and costs more to administer. Social insurance as used in France and Germany would increase costs to patients and to employers, who may well move businesses elsewhere if they had to contribute to employees’ health care fees. Less care would be provided free at the point of use and more costs would be picked up by the individual. There is no evidence to show that core problems with waiting times and quality of care would be improved simply by changing the way we collect payment for our health service. It is interesting that no other country that funds their health care through taxation has moved to social insurance and yet there are countries, including France that are moving the other way.

The NHS Confederation, which represents health service managers, said it was an “inescapable fact” that health costs across the world were rising faster than people’s willingness to pay. Its policy director Nigel Edwards said, “If healthcare is not sustainable by tax, there’s no reason it would be sustainable by social insurance. The basis for social insurance is directly from people’s incomes and is usually compulsory - that sounds to me like a tax.”

Charging fees will end the NHS - some suggest that patients should pay more. In France and the Netherlands about 20% of total health expenditure is from private sources. Charging patients does place the burden of care more heavily on the poor or unemployed. No evidence exists that charges deter only unnecessary use, and evidence from Sweden shows that they reduce access. Only a very significant expansion of the use of charges or co-payments would have anything other than a very limited impact on the issue of resource constraints.

It would be an end of the idea that the health service should make healthcare available to all its citizens. Using the same funding system as France or Germany won’t help shorten waiting lists - countries with social insurance still have long waiting lists, for example the Netherlands. The level of underfunding of services has in the past left them overwhelmed by demand. Even if enough staff and beds are available if funding runs out patients are made to wait until the next funding year.

Health systems across the globe are suffering under the same pressures. Health costs and patient expectations are rising and at the same time medicine continues to find ways to do more. However no other system of funding offers us a better way to respond to these pressures.


Price per copy: £2 + £1 postage and packing
Price per 5 copies: £8 + £1.50 postage and packing

Order from NHS Support Federation, Community Base, 113 Queens Road, Brighton, BN1 3XG. Email james@nhscampaign.org.


Our issue based websites:




Our issue based websites:




Our issue based websites: