Why are we asking this now?

Five years on from his seminal report for the Treasury – which paved the way for the 50 per cent real increase in National Health Service funding since 2002 – Sir Derek Wanless yesterday published a review of how the extra money has been spent.

The former chief executive of NatWest bank was appointed in 2001 as the Government's adviser on the NHS by Gordon Brown, then Chancellor of the Exchequer, and his 2002 report provided the justification for the biggest increase in NHS funding in its history. But one recommendation that the Government failed to implement was to carry out a five-year review – perhaps fearful of what it would find. So the Kings Fund, the health policy think-tank, stepped in and commissioned Sir Derek to do it for them.

Does Sir Derek's review makegloomy reading?

Not entirely. It would be difficult to plough an extra £43 billion into the NHS and not get something back for it. There are more doctors and nurses, more intensive care beds and scanners, better hospitals, shorter waiting times, fewer heart deaths, improved cancer treatment, and better mental health care. The NHS is delivering more care to more people, more quickly and, on at least some measures, medical treatment has brought improved health.

So what has gone wrong?

Two things, principally. First, the NHS has got less efficient. Second, it is facing a bigger burden from the lifestyle problems of obesity, poor diet and lack of exercise. Though the extra cash has bought extra services, we have not had a big enough bang for the bucks. Productivity is the big disappointment – the NHS looks as if it is less efficient than it was. Unless these very different challenges can be met, the future looks bleak.

Sir Derek said: "What is clear from this review is that we are not on course to deliver the sustainable and world-class health system, and ultimately the healthier nation, that we all desire. Without significant improvements in NHS productivity, and much greater efforts to tackle obesity in particular even higher levels of funding will be needed over the next two decades... Such an expensive service could undermine the current widespread political support for the NHS and raise questions about its long term future."

Have high pay rises for doctors and nurses madematters worse?

Yes. Doctors in particular have had eye-watering rises of 25 per cent for consultants (02-03) and 23 per cent for GPs (03/4-04/5) under their new contracts. The scale of these increases, and the bigger than expected growth in NHS staff, has contributed to declining productivity, Sir Derek said. To take one example, between 2000 and 2006, the number of patients admitted per consultant fell by more than 20 per cent and the number of emergency cases by 8 per cent. Overall, the NHS failed to increase productivity by 0.75-1 per cent as anticipated in the 2002 report – which means that costs in the future will be higher than planned. Finding ways to increase the amount of care obtained for each pound spent is crucial, Sir Derek said.

What does this say about Government strategy on the NHS?

Tony Blair's mantra about the NHS was, "No extra cash without reform". Sir Derek's report shows that the cash has been provided – sackloads of it – but reform is still awaited. By throwing money at the problem, the Government turned the NHS wheel faster – but only produced more of the same. To get real reform – for example shifting services from hospitals to GP surgeries, which is currently the subject of a review by health minister Lord Ara Darzi – we will have to wait for the leaner years to come from 2008/9 onward, when the NHS growth rate falls to half its current level. The service may then be forced to increase productivity in order to get through the work. It is "human nature", Sir Derek said yesterday – people only change the way they work when their backs are against the wall.

How much has the obesity epidemic affected the NHS?

A huge amount. Five years ago the Government had a target, set a decade earlier, to reduce obesity so that it affected no more than 6 per cent of men and 8 per cent of women by 2005. But instead of falling, the numbers have soared to 23 per cent of men and 25 per cent of women. Childhood obesity has also increased, with one in five children now affected. The trend is continuing upward.

While this cannot be blamed on the NHS, it has to deal with the consequences. Unlike smoking, which kills people, obesity is the cause of much chronic ill health including heart disease, stroke, some cancers and Type 2 diabetes. "The position on obesity is much worse than the worst forecasts in 2002," Sir Derek said yesterday.

Should more be done to tackle obesity?

Yes. Improving public health should be at the centre of the Government's concerns. Reducing the avoidable burden of illness on the NHS is the key to providing an affordable service in the future, as Sir Derek said in his 2002 report. Yesterday he re-iterated his suggestion that the Secretary of State for Health be re-titled Secretary of State for Public Health, to signal a switch of priorities, and renewed his call for an independent body to be set up to establish a framework for action, across Government. "If we knew what we were aiming at we would be working out how to get there," he said

So what does the future hold for the NHS?

Alastair Darling, the Chancellor, is expected to allocate 3 - 3.5 per cent growth for the NHS in the public spending review this autumn, half the 7.4 per cent average rate over the last five years. This is widely forecast to be a disaster for the NHS, which will suddenly have to cope with a level of privation unheard of since 2002. But as Sir Derek said yesterday, the levers are in place to extract a bigger bang for the NHS bucks, and it could be that tightening budgets will force people to think how the available cash can be more effectively spent.

Alternatively, an era of belt tightening could cause people to hunker down and tick over without making real efforts at reform while they wait for the day when some future government turns on the funding tap again. That would be a foolish response. As well as failing patients, it could finally sink the NHS.

Are we just pouring money down an NHS drain?


* An extra £43bn has gone into the service over the past five years but it is still struggling to meet demand

* Doctors' salaries have soared, but the number of patients they are treating has declined

* Poor lifestyles are contributing to rapidly rising levels of obesity, about which the NHS can do little


* The extra cash has brought real gains in terms of shorter waiting times, improved treatments, and better hospitals

* Big increases in doctors and nurses mean that the NHS is now capable of delivering more and better care

* The NHS remains the most effective and economical means of delivering healthcare to the whole population