NHS costs up but output dives, says ONS

An embarrassing dispute broke out in Whitehall yesterday after John Reid, the Secretary of State for Health, condemned as "absurd" a report from the Government's own statisticians showing that NHS inefficiency had soared under Labour.

An embarrassing dispute broke out in Whitehall yesterday after John Reid, the Secretary of State for Health, condemned as "absurd" a report from the Government's own statisticians showing that NHS inefficiency had soared under Labour.

The productivity of the National Health Service has plunged by as much as 8 per cent since 1995 and fallen in every year since Labour was elected in 1997, the Office for National Statistics said.

The ONS, a department of the Treasury, said the NHS's cost bill soared by 39 per cent between 1995 and 2003 but output had failed to keep pace, posting a 28 per cent improvement.

The Conservatives seized on the report, saying it showed Gordon Brown's multibillion-pound investment in the NHS was going on higher costs rather than improved service.

The shadow Chancellor, Oliver Letwin, said: "They show that, on every one of the measures chosen by the statisticians, NHS productivity has declined under this Government. The simplest statistic of all - that spending on hospitals alone has risen five times as fast as the number of hospital treatments - tells the whole story of the colossal health inflation, waste and inefficiency that Gordon Brown's bureaucracy has built into the health service."

The report forced the Department of Health (DoH) to issue its own report showing value for money had increased by just under half a per cent in the 2002/2003 financial year. It said the ONS report, which is part of a three-year inquiry into public sector productivity, had failed to measure benefits from new drugs, home-based treatment and improved primary care.

Mr Reid said: "It's absurd that the current measure of productivity does not cover the range of massive improvements that are being seen across the NHS. While the ONS productivity measure is better than previous measures, more improvements are needed since it is still outdated and lags behind NHS improvements."

The DoH said: 6,000 to 7,000 lives each year are saved thanks to spending on life-saving heart drugs; waiting times have halved since 1997 and the overall waiting list has shrunk by 200,000; and cancer deaths are down by 10 per cent and deaths from heart disease by 23 per cent."

The Treasury referred calls to the DoH and the ONS said it would not comment on Mr Reid's remarks. Publishing the report Len Cook, the chief statistician, said the figures were not definitive. "We expect to continue to improve the reliability of these estimates over time," he said.

There was further embarrassment for the Government after a respected cross-party committee of MPs warned that £61bn in new spending could be swallowed up by red tape. The Public Accounts Committee urged the departments of health, education and transport to cut bureaucracy, simplify service delivery chains and rein in pay increases. Edward Leigh, its chairman, said: "It is vital that departments charged with spending billions of pounds of extra taxpayers' money, particularly in health, education and transport, make this count, resulting in real improvements."

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