Leading article: A ring-fenced service feels the squeeze

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You can be forgiven for being confused about what is happening in the health service. According to official figures released yesterday, the number of doctors working for the NHS rose by 2,484 in the first six months of the Coalition Government. The number of midwives also went up, while the number of managers fell by 2,013. And yet, False Economy, the new anti-cuts campaign launched under the auspices of the TUC, has produced a carefully researched list of 53,150 NHS jobs that are already doomed, with many more expected over the next four months. The casualties include doctors, dental staff, nurses, midwives and health visitors.

The causes of all this churn are complex. Some hospital trusts have overspent and have to make cuts to balance the books, for which the Government can say it is not to blame. Others are downsizing in anticipation of the reforms being pushed through by the Health Secretary, Andrew Lansley, which will shift the lion's share of NHS funds to GPs.

Another cause of the crisis in the hospitals is that they have been prevented from increasing the fees they can charge for treating patients within the NHS's internal market prices. Since they cannot use the price mechanism to cover rising costs, something else has to give. The much bigger problem facing the NHS is that, though the Government has not spared its budget from being cut, it is not adding to it, when the demand for healthcare rises continually as people live longer and expect better health.

The Tory answer to how to meet greater demand with fewer resources is a simplistic "cut the bureaucracy". This is ironic because it was a Tory government which, 25 years go, decided that the NHS was under-managed and recruited a veritable army of managers to run its then newly created internal market. Most people's experience of the NHS is not that it is over-managed, but that it is poorly managed. Cutting their numbers, or shifting managers out of primary care trusts into GP practices, is not going to answer that problem. We cannot run a world-class health service on the cheap.

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