Page last updated at 14:28 GMT, Monday, 27 July 2009 15:28 UK

NHS challenges in a time of recession

Niall Dickson is the Chief Executive of the King's Fund, an organisation which seeks to find ways in which the health system in England can be improved. Here he considers what challenges lie ahead for the National Health Service given the current financial climate, ahead of a Newsnight special on the issue later on Monday.

The politicians know that life for the National Health Service is about to become very difficult indeed. Yet they are reluctant to talk about it.

Doctors and nurses in operating theatre surgery performing an operation
The NHS was founded in 1948 to bring free healthcare to all

In the case of the government this is because they would prefer we dwell on the successes of the past decade rather than the pain of the next one.

In health, perhaps more than other areas of the public sector, Labour can point to real advances, with patients being treated more quickly, services such as accident and emergency transformed, and improvements in survival among heart and cancer patients.

A debate about how much health care will suffer because of the recession is not an attractive proposition in ministerial ranks.

Future prospects

Likewise, this side of an election the Conservatives are reluctant to spell out the gloom.

The Tories are in a similar position when it comes to health as Labour was in relation to the City in the mid-90s.

Patient in hospital
Nigel Lawson called the NHS the closest thing the English have to a religion

It is an area where traditionally they have not been trusted and where the aim must be to reassure, not to frighten.

The former chancellor Nigel Lawson once remarked that the English only had one national religion - the NHS - and that unfortunately, the Tories were seen as non-believers.

Conservative leader David Cameron has worked hard to counteract this, promising to match government funding for the NHS and embracing its underlying principles as defined by Labour in its NHS Plan of 2000.

The last thing he wants to suggest is that a Conservative government might have to preside over swingeing cuts.

Rising expectations

However, the reality is that even if the next government protects healthcare from the axe that will fall elsewhere in the public sector, future demand means the system will struggle.

In particular, unless it is able to drive up productivity, health care needs will not be met and gains made in reducing waiting times may be reversed.

Whatever does happen it looks inevitable that unpopular decisions will have to be made and staff numbers will fall.

The NHS has just passed through a phenomenal and unprecedented period of growth - nearly 7% real additional funding each year since 2000.

In some ways then it should be better prepared for a downturn. And it will need to be, it is about to enter a period where it could grow less than at any time in its history.

The numbers are stark. Since it was founded the NHS has had, on average, real terms growth of between 3-4% a year. This has enabled it to provide a more or less comprehensive service to the British people.

Increasing efficiency

But rising expectations, new technology and changing demographics require even greater increases just to stand still - changes in demography alone, particularly an increasing ageing population, could cost the NHS in England between £1bn billion and £1.4bn extra each year from now until 2017.

Under the less optimistic scenario in The King's Fund/IFS report the gap between what the system needs to maintain and improve quality and what it might get could be £20-30bn, or 30% of the budget.

It should be possible to close at least some of that gap by increasing the efficiency of the system.

There is enormous scope still to redesign services and reduce variations in performance - such as making sure all areas are following best practice and investigating why areas with similar populations appear to spend widely varying amounts on services such as mental health and cancer care.

The challenge for the health service then is to meet growing demand, maintain the quality and safety of care and save money all at the same time.

It would help if politicians signed up to help deliver that message.

Watch a special edition of Newsnight on the future of the NHS in an age of austerity on Monday 27 July 2009 at 10.30pm on BBC Two.

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