Ageing: Public Services and Demographic Change Committee Report

Lord Warner Excerpts

Thursday 17th October 2013 Lords Chamber

[Lord Warner (Lab)]

My Lords, I, too, compliment the two maiden speakers on excellent, thoughtful and entertaining speeches. I say to the noble Viscount, Lord Ridley, that a Labour Cabinet Minister, Emanuel Shinwell, lived to 109, and I challenge him to find a Conservative better in that area.

I congratulate my noble friend Lord Filkin and his committee on securing this debate and on their excellent report. This document is theoretically a wake-up call, but like so many alarm clocks, it runs the risk that people may turn over and hide themselves under the duvet rather than respond to it, so I propose to talk in more apocalyptic terms today about a national icon: the NHS, the star of Danny Boyle’s Olympic nostalgia-fest last year.

Let us forget the schmaltz for a moment and remember that the NHS is a £100 billion-plus a year business and its budget will account for nearly one-third of public service spending in 2015-16, up from just over one-quarter in 2010. By 2015, the NHS will still be spending every pound that it had in real terms in 2010, but most other public services, such as local government, will have only 70p of their 2010 pound. Those are not my figures; they are from the Institute for Fiscal Studies. The NHS is a 65 year-old pensioner that has adopted a lifestyle that is well beyond its current and future means. It now faces—and I do not think this is too apocalyptic—bankruptcy. If noble Lords do not believe me, they should read the chief executive—of whom the noble Lord, Lord Mawhinney, is so fond—of the NHS in this week’s Health Service Journal. The NHS is in very difficult financial trouble. It faces not only the demographic time bomb well described in the committee’s report, but rising public expectations and the costs of scientific advances, many of which may produce cost savings, but usually involve extra cost at the point of introduction. However, it is doing this not at a time of economic growth but at a time of fiscal constraint, probably low economic growth and serious limits on the tax ability of the electorate or the capacity to transfer resources from other public services.

Forget 2030—a huge back hole in the NHS’s finances is opening up by the end of this decade if it carries on as it is. The outgoing NHS chief executive thinks that it is £30 billion. The respected Nuffield Trust puts it at upwards of £40 billion and possibly more than £50 billion. These are serious financial problems to be tackled. As my noble friend Lord Filkin has indicated, the NHS’s core business has changed to coping with and treating long-term conditions, and often multiple long-term conditions in a single individual. However, we have simply not changed the service delivery model accordingly.

It is increasingly apparent that we are spending our highly valued NHS pounds on the wrong business model. The customer base has changed and needs something radically different. The NHS is seriously on the way to becoming like British Leyland in the 1970s. I do not have time today to describe how we need to reshape these services but—and this is my final point—if we do not change them and increase the efficiency of staff on NHS plant, we face a real problem. Even if we make all those changes, that will remain a problem. If the NHS is to remain largely a tax-funded healthcare system universally available in this country, it has to find new sources of revenue streams and new ways of adding money to that provided by the taxpayer. We need to look at the possibility of changing the boundary of what the NHS covers. We need to look at co-payments. We need to look at the NHS undertaking more commercial activities. There are many more possibilities.

I recognise that I am trespassing on holy ground here, but we have to start facing up to these issues if we are going to make the kind of responses that my noble friend’s committee’s report suggests that we should be making.