National Health Service

Lord Desai Excerpts

Thursday 8th January 2015 Lords Chamber

[Lord Desai (Lab)]

My Lords, it is a great pleasure to follow the noble Lord, because he has taken the discussion in the direction that I wanted to take it. I start by saying that the NHS is a miracle; it has a great staff. It works by consensus, but, as Lord Bauer, who was here some years ago, used to say, the more we are similar, the more we exaggerate our differences. The differences that we have over the NHS are actually very small, but it pays us politically to exaggerate how large they are. For as long as I have lived here and taken part in debates on the NHS, it has always been in crisis. I do not remember a single debate in which everybody said, “Isn’t it great? Things are fine. Everybody is happy. Nurses’ and GPs’ morale is no longer shattered”. It never works like that. We can live with this miracle only by being dissatisfied with it constantly.

There will always be the cliff-hanger idea that there is not enough money. There is absolutely no way of having enough money in a zero-price service which will not generate excess demand. That is not even elementary economics. If you do not know it, you should not be allowed even to enter a course of economics.

But we have still managed. We have managed to finance the NHS by and large from a single source of funds—although there are peripheral aspects. One problem will be—and this is not a matter of who wins the next election—that there will no longer be the kind of money there was. As I have said in other contexts, we are about to enter a low-growth period for the next 10 or 15 years, and the good times are over. They are not going to come back—this is nothing to do with me, nothing to do with the Labour Party and nothing to do with the Conservative Party—so we will have to think of smart ways of meeting the needs that we will have. Not only is the NHS a zero-price service but the types of demand that it faces are proliferating. People are not only living longer but they want a better quality of life, a better shape and things like that—and then we have to address new problems, for example in mental health.

Let me concentrate on one big lacuna that I see in the system. The system does not ask consumers to do enough. We provide them with a zero-price service, but, in return, the consumer does nothing. The consumer is not asked to look after his or her health, to cultivate good habits of not drinking too much or not smoking too much, or whatever it is. The consumer expects, upon presenting himself or herself, to be treated. In any zero-price industry and with any zero-price commodity, if you are not going to allocate resources by price, there has to be something else to ration, and the rationing that we use is time. Waiting time is one rationing device that we use. As we have seen from recent coverage of the A&E crisis, people feel that if they are asked to wait for hours, it is the end of the world. They should have gone to their GP, as the noble Baroness, Lady Barker, said, but going to their GP is too much of a hassle, so they suddenly present themselves at the cheap option, A&E. But if you have to wait, you should accept the price because you did not invest the time in going to your GP. You think this is cheaper? It is not. You have to pay in extra time.

One thing I have advocated off and on is that patients ought to be made aware of how much things cost. They should not be charged but they should be made aware of the shadow price of the things they get, especially the things they waste. If they do not turn up for an appointment, they should be told what it costs. For a long time, I have advocated that we should give each person a shadow budget per head of NHS spend—perhaps £1,500 or 1,500 points. Every time you go to a GP or anywhere, you have a little Oyster card and it deducts so many points from that amount. You do not have to pay but you will be made aware at the end of the year by getting an account of how you spent your 1,500 points.

People ought to be made aware that these things have different prices. If we can make them at all aware of this, it might change their behaviour. We will need not only more productivity but better behaviour from consumers. We will all have to economise. We cannot let the consumer out of the need to economise to get a better health service. I do not have time to say much more than that, but I hope that if we can change behaviour with shadow pricing in the National Health Service, we will have taken a great step forward.