Jeremy Laurance: This option would hurt, however you did it

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The Independent Online

Like a favoured son, the NHS grew fat during the years of plenty under Labour, doubling in size in real terms. Now it is suffering the envious jibes of rival departments, placed on starvation rations, questioning how it can justify its protected status.

Its size alone makes it a juicy target – £105bn for England in 2010-11 – more than education and defence combined. Could it sustain 25 per cent cuts in line with those being demanded of other departments?

From one perspective it looks do-able – cutting by this margin would take the annual budget down to £78bn in today's money, which is where the NHS was in 2004-5, according to Professor John Appleby, chief economist at the Kings Fund. But that was a health service with fewer staff, fewer operations and longer waiting lists. Reversing the improvements made over the last six years would have to be achieved in the next three. It would mean slashing and burning jobs and services.

The only practical way of achieving the required cuts would be to remove whole services. Dentistry could go, saving the NHS £1.6bn annually – many patients pay privately already and dentistry is being privatised across the world. NHS sight tests, fertility treatment and terminations could also be axed.

The NHS workforce of over 1.3 million is one of the largest in the world, and its paybill accounts for half the total budget (70 per cent of the budget in hospitals). Cutting jobs is the quickest way of saving money – but the effects would be felt in longer waiting lists. The Royal College of Nursing reports today that 10,000 posts have been earmarked for cuts, twice the number two months ago, as trusts struggle to meet £20bn "efficiency" savings demanded over the next four years.

Professor Appleby said measures on the scale needed would be "hugely painful". It would be impossible to protect patients from the impact which would make them politically unpalatable.

An alternative would be to charge £10 to see a GP or £25 for an overnight stay in hospital, raising several billions. People earning over a certain income might be forced out of the NHS (while continuing to pay taxes towards it) and required to buy private health insurance, as in Holland.

The net result would be a service that cost patients more and delivered less. Whether it would qualify for the title "National Health Service" is hard to say.